Gold futures traded lower Friday, falling further away from the two-month highs hit earlier this week, but prices still were poised for a second week in a row of gains.
Losses for the precious metal come in the wake of “wholesale profit taking across all asset classes,” Jeff Wright, chief investment officer at Wolfpack Capital, told MarketWatch. “Institutions are protecting gains in every direction or position where there is a gain. The rotation to safe haven gold from high growth equities was stunted this morning as a result.”
“We could be in for some more choppy markets across the board,” he said. “Gold will get good support, but also see rise in [that] same volatility.”
February gold GC00, -0.54% GCG22, -0.54% fell $9.30, or 0.5%, to $1,833.30 an ounce, after losing less than $1 Thursday. Still, the precious metal was looking at a weekly advance of 0.9%, after a rise of 1.1% the week before. Gold had settled Wednesday at its highest in two months.
Meanwhile, silver for March delivery SIH22, -1.12% was down 30 cents, or 1.2%, to $24.415 an ounce, following a 2% rise Thursday to its highest value since Nov. 19. Silver is looking at its sharpest weekly advance, up 6.5%, since December of 2020.
“Although off its best levels, gold is still up for the second week, suggesting investors have been seeking protection against surging inflation and as excessive risk taking in equities and crypto came to an end,” said Fawad Razaqzada, market analyst at ThinkMarkets, in a daily note.
Precious metals such as gold have enjoyed haven demand amid a global selloff in equities and increased anxieties about the market outlook set against rising inflation and a Federal Reserve that has expressed its intent on pulling back on easy-money policies.
That uncertain backdrop has benefited gold in the near-term but the prospect of higher rates and Treasury yields eventually rising, will likely pose a headwind for gold, strategists have said.
The rate-setting Federal Open Market Committee next gathers on Jan. 25-26 and is expected to set the stage for a series of interest-rate increases.
Still, Razaqzada argues that much of that bearish dynamic could already be priced into gold futures, which until recently had struggled to reach and sustain a psychological and technical level at $1,800.
“I think the markets have priced in a hawkish Fed meeting already and gold has been able to shrug off the recent strength in yields. So, a potential breakout from the current ranges should not be too surprising,” the ThinkMarkets analyst wrote.
“It would help if the Fed were to talk down the prospects of an even faster tightening cycle,” he said.
Other metals traded on Comex headed lower, with the exception of palladium, which saw its March contract PAH22, +2.04% climb by 1.2% to $2,099 an ounce, on its way to a more than 11% rise for the week.
March copper HGH22, -0.49% lost 0.7% to $4.548 a pound, with prices up 2.9% for the week. April platinum PLJ22, -0.69% shed 1% to $1,040 an ounce, but trading nearly 8% higher for the week.
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