By Myra P. Saefong, MarketWatch
Gold prices ended with a loss on Friday, but tallied a third consecutive weekly gain as political uncertainty continued to boost investment demand for the metal.
“The cocktail of [recent] dollar weakness and ongoing Trump developments encouraged bullish investors to pounce,” said Lukman Otunuga, research analyst at FXTM.
Gold “remains bullish in the short term amid the rising political risks across the globe and could edge higher towards $1,250 if the revived [U.S. Federal Reserve] uncertainty bolsters the yellow metal’s attraction further,” he said.
April gold fell $2.50, or 0.2%, to settle at $1,239.10 an ounce, seesawing between modest losses and gains after marking its highest settlement in more than three months on Thursday, according to FactSet data. For the week, prices finished roughly 0.3% higher.That marked the metal’s third straight weekly gain.
“Although the strong likelihood of the Fed raising U.S. interest rates this year may pressure gold in the longer term, it will be the cocktail of events in Europe, Brexit woes and the Trump saga that may ensure gold remains buoyed in the short term,” said Otunuga, in a Friday email update.
Prices for gold posted gains in each of the last two trading sessions, buoyed by a weaker dollar as traders await more detail on Trump’s tax-policy plans. The ICE U.S. Dollar Index /quotes/zigman/1652083/delayed DXY -0.26% was up 0.5% Friday—trading about 0.2% higher for week.
Gold and the dollar often move inversely as a richer dollar dulls the appeal of investors using other currencies.
Even so, gold prices Friday generally held “steady” despite Friday’s strength in the dollar, said Anthem Blanchard, chief executive officer of Anthem Vault and Amagi Metals. The dollar index and gold futures both trade higher month to date.
“Today’s micro trend holds consistent with 2017’s larger trend of U.S. dollar strength in tandem with gold price strength in U.S. dollar terms,” said Blanchard. “Historically, such a combination running together bodes well for physical gold prices holding a further sustained rally.”
Meanwhile, Fed Chairwoman Janet Yellen spent two days this week testifying on Capitol Hill. She said on Tuesday that the Fed has penciled in three interest-rate hikes this year and on Wednesday she defended the central bank’s monetary and bank regulatory policy from House Republicans unhappy with the pace of economic growth and the health of the financial sector.
Higher interest rates lift the appeal of holding dollars. That also means that a stronger dollar cuts the worth of holding nonyielding gold that’s priced in this denomination.
On Comex, futures prices for silver moved lower, pulling back a day after marking their highest settlement since Nov. 10. March silver fell 4.4 cents, or 0.2%, to $18.03 an ounce, but still ending about 0.5% higher for the week.
March copper fell 1.2 cents, or 0.4%, to $2.707 a pound, for a weekly loss of 2.2%. April platinum shed $9.70, or 1%, to $1,006 an ounce, with prices losing about 0.6% for the week, while March palladium lost $14.10, or 1.8%, to $779.20 an ounce—down 0.5% for the week.
The exchange-traded fund SPDR Gold Trust /quotes/zigman/41663/composite GLD +1.20% was down 0.1%, though trading around 0.3% higher on the week. The iShares Silver /quotes/zigman/417006/composite SLV +1.18% lost 0.3%, set for a weekly gain of 0.4%. The VanEck Vectors Gold Miners ETF /quotes/zigman/70614826/composite GDX +0.84% fell 1.4%, building a loss of 1.8% for the week.