Gold futures declined on Friday, looking to extend their sharp loss from a day earlier and post a fall for a third consecutive week.
The bias for gold is still to downside, as the Federal Reserve’s statement on monetary policy and Fed Chair Jerome Powell’s comments from Wednesday are “digested by market,” Jeff Wright, chief investment officer at Wolfpack Capital, told MarketWatch. The Fed taper of bond purchases “will commence by year end and [interest] rates will begin to tighten most likely in 2022.”
Still gold is finding some support though from a “risk-off” sentiment in the U.S. equity markets, due to China property giant Evergrande’s 3333, -11.61% interest payment miss and possibility of spread in the Chinese economy, which could impact the U.S. economy, in time, said Wright.
“The indirect exposure is a risk currently being factored in,” he said. So, “there is a small appetite for safe-haven gold….but I believe it is short lived.”
December gold GCZ21, -0.25% GC00, -0.25% fell by $5.50, or 0.3%, to trade at $1,744.30 an ounce on the session. The 1.6% drop on Thursday represented the sharpest one-day dollar and percentage decline for bullion since Sept. 16. For the week, gold futures traded around 0.4% lower.
Bullion has been under pressure since the Fed on Wednesday signaled its intent to “soon” taper its bond purchases and raise interest rates by late next year, which could dim appetite for bullion if investors shift to assets that offer yields. The central bank’s projections of interest-rate increases also pointed to rate increases as early as 2022, which could also dent demand for precious metals.
Looking ahead, analysts said that absent a near-term catalyst, gold may be more influenced by U.S. dollar moves and risk appetite.
“Moving forward, investors should understand that, unless anything noteworthy happens to the dollar index, gold prices will likely be influenced more by investors’ risk appetite,” wrote Naeem Aslam, chief market analyst at AvaTrade, in a daily note.
The dollar was up 0.1% on the week and down 0.2% on Friday, as measured by the ICE U.S. Dollar Index DXY, -0.12%, a measure of the buck against a half-dozen currencies.
Meanwhile, silver for December delivery SIZ21, -1.74% SI00, -1.74% was trading 40.4 cents, or 1.8%, lower, at nearly $22.28 an ounce, following a 1% decline on Thursday. For the week, silver is down 0.3%.
Precious metals also decline don the back of strength in U.S. Treasury yields, with the 10-year Treasury note TMUBMUSD10Y, 1.451% touching a high of 1.454% in Friday dealings. Rising rates can undercut demand for precious metals which don’t offer a coupon.
Among other metals traded on Comex, December copper HGZ21, +0.28% edged up by 0.3% to $4.24 a pound, trading 0.1% lower for the week.
October platinum PLV21, -2.79% fell 2.7% to $970.30 an ounce, but looking at a weekly rise of over 4%. December palladium declined by 2.1% to $1,931 an ounce, contributing to a roughly 2.7% loss for the week.
Add Comment