Gold futures moved lower in Friday dealings but after six consecutive session gains, stayed on track to tally a third weekly climb.
Prices on Thursday settled at their highest in more than four months, extend a streak of daily gains to the longest since July 2020.
“Growing uncertainty surrounding the [Federal Reserve’s] course of action over the coming months and how that will affect inflation and U.S. stock market levels,” have helped to support gold prices, said Jeff Klearman, portfolio manager at GraniteShares, which offers the GraniteShares Gold Trust.
The U.S. central bank has “repeatedly stated it will keep rates near zero for some time tightening monetary policy, if necessary, by first scaling back its Treasury and mortgage backed securities buyback program,” he told MarketWatch. “Concerns the Fed may need to raise rates sooner than later because of higher-than-expected inflation has unsettled stock markets, increasing investor desire for gold as a haven investment.”
Along those same lines, “the rapid and sharp decline of bitcoin and other cryptocurrencies affected by the same uncertainty plaguing U.S. stock markets, may have caused cryptocurrency investors to lose faith in cryptocurrencies as a ‘gold replacement”’ and move directly into gold as a haven investment, Klearman said.
Meanwhile, strength in the U.S. dollar also contributed to gold’s overall gains, he said. The ICE U.S. Dollar Index trades more than 1% lower for the month and down over 3% for the quarter.
At last check, June gold fell $3.80, or 0.2%, at $1,878.10 an ounce.
July silver also lost 35 cents, or 1.3%, to nearly $27.72 an ounce.
For the week, gold futures, based on the most-active contracts, are on pace for a gain of over 2%, which would mark its third consecutive weekly gain, while silver trades up more than 1% from the week ago settlement, FactSet data show.
Gold prices have struggled to move back above the $1,900 mark, a level it hasn’t been able to reach since early January of this year.
However, there are some conditions under which it may manage to move solidly above that level, including “continued uncertainty with respect to the Fed’s ability or desire to maintain its aggressively accommodative monetary policy,” said Klearman.
Also, “data confirming inflation is more than transitory, and that the Fed will be forced to act sooner than later, may increase the volatility of U.S. stock markets and cryptocurrencies and support gold prices,” he said.
Among other metals traded on Comex, July copper shed 0.9% to $4.52 a pound, trading around 3% lower for the week.
Copper prices, which were up over 1.5% through Tuesday, dropped over 3% Wednesday “following China’s announcement it will act to prevent ‘unreasonable’ price increases,” said Klearman, who added that China is responsible for over half the world’s consumption of copper.
July platinum fell by 1% to $1,192.60 an ounce, down around 2.5% for the week, while June palladium lost 3.1% to $2,782.50 an ounce, with the contract on track for a weekly loss of 3.8%. September palladium which is also among the most active, declined by 2.6% to $2,806 an ounce.
Earlier this week, Metals Focus estimated that this year, platinum supplies will remain in surplus, but palladium’s deficit is set to climb.