Gold price heads for 2% weekly gain as dollar wobbles
New York (Jan 13) Gold prices slipped Friday even as the dollar wobbled, pulling back from seven-week highs and a push above $1,200 for the yellow metal earlier this week.
“Traders are simply booking profit after a massive move,” said Naeem Aslam, chief market analyst with ThinkMarkets. That move was fueled by a dollar and stock retreat seen as post-election enthusiasm stalled absent fresh, specific details on fiscal spending plans and other economy-linked proposals from President-elect Donald Trump, who gave a press conference midweek.
Gold, which is headed for a roughly 2% weekly gain, settled Thursday at its highest since Nov. 22, and had gained in seven of eight sessions.
Early Friday, gold for February delivery GCG7, -0.15% fell $3.30, or 0.3%, to $1,196.50 an ounce.
The ICE Dollar Index DXY, -0.29% slid 0.2% to 101.24, trading around its lowest level in a month. A weaker dollar tends to boost gold purchases from investors using other currencies, but the two investments can occasionally drop their inverse relationship, as was the case Friday.
On Thursday, the yield on the 10-year Treasury TMUBMUSD10Y, -0.72% , which like the dollar tends to move inversely to gold, touched its lowest level since Nov. 30.
“Going forward the focus will be on two important elements and we think both of them have massive potential to support the gold price,” Aslam said. “On Tuesday, we have Theresa May laying out the plan for her version of Brexit. Surely, investors are not going to like it if it shows that she is going to take a hard approach. This could boost the gold demand. Finally, we have the U.S. inauguration ceremony [on January 21] and hopes are that Donald Trump will be able to satisfy the bulls that his fiscal spending and tax reform plans will soon become a reality.”
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As for the incoming U.S. administration, “the expectations are so high that we think there are greater chances that traders may feel that they did not get what they bargain for. Under such a scenario, we could see the gold continue its rally,” Aslam said.
In the near term, December readings on retail sales and producer prices are due at 8:30 a.m. Eastern Time Friday could stir market moves. Economists polled by MarketWatch expect 0.8% growth for retail sales and a 0.3% rise for the producer price index.
Aslam pegged support for gold at $1,170 and resistance at $1,241.
March silver SIH7, -0.06% fell less than half a cent, or 0.2%, to $16.80 an ounce, while copper for the same month HGH7, -0.71% slipped 2 cents, or 0.8%, to $2.65 a pound.
Among the exchange-traded funds, the SPDR Gold Trust GLD, +0.36% tacked on 0.4% premarket, while the iShares Silver Trust SLV, +0.25% rose 0.3%. The VanEck Vectors Gold Miners ETF GDX, +0.22% edged up 0.2%.
Source: MarketWatch
