Gold futures headed lower on Friday, capping a strong week and month for bullion that recently saw prices touch their highest levels in six weeks.
“Inflation is accelerating while Treasury yields trend lower, resulting in record low negative yields,” which are bullish for gold, Michael Armbruster, managing partner at Altavest, told MarketWatch. “It also helps gold that the dollar has rolled over yet again.”
The dollar traded down 1% on the week, as gauged by the ICE U.S. Dollar Index DXY, a measure of the buck against a half-dozen currencies.
Armbruster said that earlier this month, Altavest had “recommended buying the dips in gold below $1,800, as the economic regime has become much more favorable for the yellow metal.”
Gold may even trade back at $2,000 before the end of the year, he said. Prices haven’t settled above that mark since August of last year, the same month when prices climbed to a record high.
the most-active contract, was down $7, or 0.4%, at $1,828.80 an ounce, following a 1.7% surge on Thursday, which marked the highest settlement for the most-active futures contract since June 16 and largest one-day percentage gain since May 6.
For the week, bullion is on track for a weekly rise of around 1.3% and a 3% monthly advance, its third such gain of the past four months, FactSet data show.
Silver futures, meanwhile, traded lower with the September contract
down 13.2 cents, or 0.5%, to $25.65 an ounce, trading 1.7% higher for the week, but on track for a monthly loss of 2.1%.
Gold gained on Thursday, buoyed by weaker-than-expected U.S. economic data, even as the Federal Reserve indicated Wednesday that the central bank may taper its bond-buying programs in coming months.
“Gold held onto its post-Fed gains but appears to have met resistance around $1,830…If the dollar’s losses deepen in the coming days and Treasury yields remain subdued, the prospect for a break above this resistance is strong,” wrote Raffi Boyadjian, lead investment analyst at XM, in a daily note.
Also Friday, consumer sentiment showed a decline fell to 81.2 in July from 85.5 in June, according to the University of Michigan.
Even as COVID headline continue to dominate the news, Armbruster said Altavest is not trading gold based those headlines as COVID infections appear to have peaked and hospitalization and deaths have not seen the same uptick as infections.
Still, Fawad Razaqzada, market analyst at ThinkMarkets told MarketWatch that it’s worth keeping a close eye on the COVID situation. “If the situation gets bad, it could negatively impact growth and, in turn, the Fed’s policy.”
For the week ahead, Razaqzada said the U.S. nonfarm payrolls report is likely to be the “focal point for gold traders, as it could impact the Fed’s decision on the timeline of tapering” quantitative easing.
Among other metals traded on Comex, September copper
shed nearly 0.5% to $4.50 a pound, with prices up around 5% for the month.
lost 2% to $1,046.70 an ounce, trading 2.5% lower for the month, while September palladium
traded at $2,637.50 an ounce, down 0.2% in Friday dealings, poised for a monthly loss of over 5%.