Gold futures post a loss for second straight week

San Francisco (May21)  Gold futures settled Friday lower to tally a second straight weekly loss, as growing expectations for an increase of U.S. interest rates as soon as next month pushed prices to lowest level since late April.

June gold GCM6, -0.15%  fell by $1.90, or 0.2%, to settle at $1,252.90 an ounce, marking its lowest settlement since April 27. For the week, prices were down about 1.6%. They posted a fall of nearly 1.7% last week.

July silver SIN6, +0.35%  added 3.9 cents, or 0.2%, to $16.532 an ounce after ending the Thursday session at $16.49, its lowest since April 18. For the week, silver saw a loss of 3.5%.

The SPDR Gold Trust GLD, -0.13%  traded 0.1% lower Friday, but the iShares Silver Trust SLV, +0.13%  was up 0.4%. The VanEck Vectors Gold Miners exchange-traded fund GDX, +0.38%  climbed 0.2%.



“Short-term gold investors are now on the sidelines on expectations of a…June interest rate hike,” said Chintan Karnani, chief market analyst at Insignia Consultants.

Upbeat U.S. economic data didn’t help. Existing-home sales rose in April.

Karnani said he advised his clients to use any sharp decline in gold over the next two weeks to invest in the metal for the short term.

Revised rate-hike expectations followed the midweek release of Federal Reserve’s April minutes, which showed the central bank is considering hiking ultralow interest rates in June.

Higher interest rates would presumably lift dollar demand, dampening buyer interest in dollar-priced precious metals. Rate hikes can also weigh on gold as the precious metal doesn’t pay interest. That tends to push investors toward higher-yielding alternatives when rates are on the rise.

The U.S. Dollar Index DXY, -0.04% was mostly steady Friday but traded 0.7% higher for the week.

Next week, the quarterly GDP numbers will be key, said Naeem Aslam, chief market analyst at ThinkForex.

“A strong number will surely be good news for the dollar and for the Fed that confirm a further sign of confidence,” he said. “This could take a little more wind out of the rally for gold which we have experienced so far this year.”

Looking further ahead, Rob Haworth, senior investment strategist at the Private Client Reserve at U.S. Bank, said that over the rest of the year “the trend in global growth will be an important factor in gold trends.”

“If growth holds up as we expect, gold will likely be under pressure since the Fed will be able to continue to raise interest rates and other global central banks may not require much additional monetary accommodation.,” he said. “If growth trends deteriorate, gold could see further gains with the market pricing in fewer Fed rate increases and additional monetary stimulus from global central banks.”

Read: Charts reveal a bearish trend lurking in gold futures

Among other metals, July copper HGN6, -0.22%  fell about half a cent, or 0.3%, to $2.056 a pound, down 0.9% for the week. July platinum PLN6, +1.10%  added $10, or 1%, to $1,023.30 an ounce, but readied for a weekly loss of 2.7%. June palladium PAM6, +0.31%  rose 45 cents, or 0.1%, to $558.90 an ounce, but has lost about 5.7% for the week.