Gold futures settle lower, but hang on to small weekly gain

New York (Oct 15)  Gold futures settled lower Friday as the dollar climbed on the back of upbeat U.S. retail sales data, but scored their first weekly gain in three weeks.

Futuresl had posted declines in each of the last two weeks, with last week’s roughly 5% drop being the largest of its kind in more than three years.



December gold GCZ6, -0.47%  fell $2.10, or 0.2%, to settle at $1,255.50 an ounce. Gold futures ended the week about 0.3% higher, according to Fact Set data.

Analysts for The 7:00’s Report said they have a “bullish” outlook on gold given that the Federal Reserve “has telegraphed a ‘dovish hike’ in December, while the real interest rate environment favors being long” on the metal.

On Friday, strength in the ICE U.S. Dollar Index DXY, +0.55% which rose 0.5% as of gold’s settlement, put some pressure on dollar-denominated precious metals prices. It was set for a gain of about 1.4% for the week.

Overall, however, “gold has held up against the rising dollar, and the strength in [exchange-traded fund] holdings suggests that the fund managers returning to gold in 2016 are looking beyond the noise,” Adrian Ash, head of research at BullionVault, told MarketWatch.

The greenback gained on the back of U.S. data that showed retail sales rebounded in September.

Consumer sentiment in early October, however, took a hit as concerns about the presidential election began to weigh, according to the University of Michigan.

The Federal Reserve has been tracking economic data to decide the timing of the next rate increase. On Friday, Boston Fed President Eric Rosengren said the central bank may have to be more aggressive in raising interest rates than the measured pace it currently projects.

Higher interest rates can boost the dollar and dull demand for dollar-denominated commodities including gold and silver.

Also in a speech Friday, Fed Chairwoman Janet Yellen said an easy interest rate stance “could have costs that exceed the benefits by increasing the risk of financial instability or undermining price stability.”

Fed minutes released Wednesday from the central bank’s September meeting showed that several voting members of the policy committee said a rate increase would be needed “relatively soon,” but the committee decided to wait for “further evidence” of continued progress toward full employment and a faster pace of inflation.

The next Fed meeting is scheduled for Nov. 1-2, but expectations for a rate increase at that meeting are slim. Markets have priced in more than a 60% chance for a rate increase at the December meeting, according to Fed-funds futures trading.

Meanwhile, Ash said trading in London was quiet because the market was “decamping to Singapore” for next week’s annual London Bullion Market Association conference.

Rounding out action in the metals sector, December silver SIZ6, -0.22%  fell 1.7 cents, or 0.1%, to $17.441 an ounce, holding on to a nearly 0.4% gain on the week, while December copper HGZ6, -0.78% lost 1.2 cents, or 0.5%, to $2.111 a pound, ending 2.5% lower for the week.

January platinum PLF7, +0.42% rose $6.60, or 0.7%, to $939.50 an ounce, but still saw a weekly loss of 2.4%, while December palladium PAZ6, +1.52%  tacked on $11.45, or 1.8%, to $648.30 an ounce, paring its weekly loss to about 2.9%.

Among ETFs Friday, the SPDR Gold Trust GLD, -0.56%  edged down by 0.3%, poised for a weekly loss of less than 0.1%, while the iShares Silver Trust SLV, -0.30%  traded down 0.3%, set to lose 0.2% for the week. The VanEck Vectors Gold Miners ETF GDX, -2.13%  fell 1.9%, but was still up about 0.2% from a week ago.

Source: MarketWatch