Gold prices score gain of more than 2% for the week
New York (Mar 17) Gold futures ended higher on Friday, helping the yellow metal record its highest weekly climb since early February, as weakness in the U.S. dollar, following Wednesday’s Federal Reserve decision, provided a runway for gains.
April gold GCJ7, +0.18% rose $3.10, or 0.3%, to settle at $1,230.20 an ounce, which marks it highest finish since early March. Gold gained about 2.4% for the week, which was the strongest such gain since the week ended Feb. 3, according to FactSet data.
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Gold’s sister metal, silver for May delivery SIK7, +0.40% added 8.3 cents, or 0.5%, to $17.413 an ounce, for a weekly gain of 2.9%—its best since early January.
A measure of the dollar’s strength, the ICE U.S. Dollar Index DXY, +0.05% looked to end the week about 1.1% lower. Weakness in the buck can make assets priced in the currency, like gold, more appealing to those using other monetary units to buy it.
“I am bullish on gold prices as I believe the U.S. dollar will continue to weaken,” Christian Magoon, chief executive officer of Amplify Investments, told MarketWatch.
The Fed on Wednesday lifted benchmark interest rates by a quarter-point as widely expected. The central bank’s statement and forecasts for future rate increases was seen as less aggressive than had been anticipated. That put some pressure on the dollar.
Magoon also believes that the so-called “Trump bump” in the financial markets “will continue to fade as the realities of the legislative process will slow or stop many Trump initiatives.” That “will also be bullish for gold.”
Indeed, gains for U.S. equities have slowed recently.
Jeffrey Nichols, senior economic adviser for Rosland Capital, said recent gold gains have been driven in part by tapering momentum in the S&P 500 index SPX, -0.08% and the Dow Jones Industrial Average DJIA, -0.04% which have cooled their record-setting pace lately.
“Momentum players will shift from equities to gold where there is momentum that is now strengthening,” said Nichols.
President Donald Trump and German Chancellor Angela Merkel appeared to have a tense first meeting, based on their interaction at a photo-op on Friday after their Oval Office Meeting. Photo: Getty.
Still, some market strategists see near-term headwinds for precious metals, especially since the bullish sentiment spurred by Trump’s proposals to juice the U.S. economy through fiscal-stimulus measures haven’t entirely vanished.
Although there are lingering concerns about Trump’s ability to implement his pro-business agenda, their enactment could cause the Fed to quicken its pace of rate increases—a negative for gold.
“Although bulls have exploited dollar’s weakness to elevate gold, gains could be limited in the longer term if the Fed readopts an aggressive stance,” said Lukman Otunuga, analyst at FXTM, in a Friday research note.
Among other metals on Comex, May copper HGK7, +0.47% rose 0.5% to $2.692 a pound, ending about 3.7% higher on the week. April platinum PLJ7, +0.53% added 0.5% to $963 an ounce, for a weekly gain of 2.6%, while June palladium PAM7, +1.40% rose 1.2% to $775.80 an ounce—up about 4.1% for the week.
In exchange-traded funds, the SPDR Gold Trust GLD, +0.23% added 0.3%, looking at a weekly rise of 2%. while the VanEck Vectors Gold Miners ETF GDX, -0.57% was 0.6% lower, but up about 4.2% on the week.
Source: MarketWatch
