Gold prices bounce after notching worst week of the year
London (May 8) Gold prices snapped back on Monday after suffering their largest weekly loss of the year, breaking with the metal’s typically inverse relationship to a firmer dollar as global markets digested Sunday’s French election.
Although the dollar gained, U.S. stocks were expected to sputter in line with mild losses for their European counterparts as global equities markets took the French election victory by Emmanuel Macron, the broader market’s preference to euroskeptic Marine Le Pen, in stride. That helped the battered gold market pause, for now, its recent selloff.
“What we’re seeing this morning is a classic case of the rumor – or the expected result in this case - being bought and the fact being sold,” said Craig Erlam, currency strategist with Oanda. “The [broad market] gains over the last couple of weeks since Macron’s first round victory have been substantial and it would appear the trade has exhausted itself.”
Even with political risk subsiding for now, June gold GCM7, +0.47% rose $8.20, or 0.7%, to $1,235.10 an ounce. On Friday, the contract settled at $1,226.90 an ounce, with prices at their lowest level in about seven weeks. Prices finished about 3.3% lower for the week, which was the largest weekly percentage loss since the week ended Nov. 11, according to FactSet data.
July silver SIN7, +0.62% rose 11 cents, or 0.7%, to $16.3800. It closed Friday at $16.274 an ounce, its lowest settlement of 2017. It ended roughly 5.7% lower for the week, for its worst weekly decline since the week ended Oct. 7.
The ICE U.S. Dollar Index DXY, +0.21% which measures the dollar against a basket of six currencies, was up 0.2%.
TimeGold - Electronic Jun 2017Jul 16Sep 16Nov 16Jan 17Mar 17May 17
US:GCM7
$1,100$1,200$1,300$1,400
Gold prices ended lower Friday, holding ground at the lowest settlement since mid-March and suffering from their largest weekly loss of the year so far after April’s strong U.S. jobs report was seen as keeping the Federal Reserve on a path of higher interest rates, with another hike increasingly likely as soon as next month.
Labor-market data are significant for gold traders because it is one of the economic reports closely followed by the Fed as the central bank determines the pace of its monetary-policy-normalization initiative. Higher rates tend to be bullish for the dollar and bearish for commodities pegged to the currency, making them more expensive to buyers using other currencies.
And: Crude and copper are getting hammered, but ‘not signaling recession—yet’
In exchange-traded funds, the SPDR Gold Trust GLD, +0.19% was up 0.3% premarket Monday after a weekly loss of 3.3%. The VanEck Vectors Gold Miners GDX, +2.13% rose 0.8%, but lost 2.7% for last week, while the iShares Silver Trust SLV, +0.45% added 0.5%, after trading over 5% lower for the week.
Source: MarketWatch
