Gold price retreats after booking highest close in a month, set for weekly loss

London (June 15)  Gold futures on Friday pulled back from the highest close in about month as the U.S. dollar held on to firm gains against rival currencies, weighing on assets pegged to the monetary unit.

August gold GCQ8, -0.48%  slipped by $6.60, or 0.5%, to $1,301.70 an ounce, after hitting its highest level since mid to late May, according to FactSet data. The yellow metal, however, was holding ground above the psychologically significant level at $1,300, a day after the European Central Bank spelled the end of its easy-money policies but did so at a more cautious pace than had been anticipated, driving the euro EURUSD, +0.2334%  on Thursday to its worst one-day loss against greenback since 2016.

On Thursday, gold gained even as the ICE U.S. Dollar Index DXY, -0.05% a measure of the dollar against a half-dozen major currencies, traded sharply higher, with the currency gauge currently at 94.82, hovering around its peak for June. The index, heavily weighted toward euros, is up 1.4% so far this week, while gold futures are set for a decline of about 0.1%.

Adrian Ash, director of research at BullionVault, said fundamental gold demand has weakened during a seasonally fallow period for the commodity after holidays in India and Asia that tend to drive up appetite for bullion.

“Investor demand has really gone soft,” Ash told MarketWatch.

Meanwhile, July silver SIN8, -0.13%  gave up 3 cents, or 0.2%, to $17.20 an ounce, after surging by 1.6% on Thursday. Silver is on pace for a weekly gain of about 2.9%.



Separately, on Friday, the Bank of Japan left its monetary policy steady, but investors were focused on its comments on consumer-price inflation. The BOJ update on monetary policy comes after the comparatively more hawkish tones set by the ECB, which held its benchmark rates in check but laid out a timetable to eventually tighten policy sometime next year, while the Federal Reserve lifted rates by a quarter-point for a seventh time since December of 2015 to a range between 1.75% and 2%.

A rising rate environment tends to be bearish for gold which doesn’t offer a yield.

MarletWatch

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