Gold price suffers first weekly loss in more than a month
New York (June 11) Gold prices fell Friday to notch a third-straight decline and their first weekly drop in more than a month, despite a market fraught with the type of political drama that would ordinarily have offered a boost to precious metals.
August gold GCQ7, -0.84% lost $8.10, or 0.6%, to settle at $1,271.40 an ounce—logging the longest skid since the three-session period ended May 5. The metal saw a weekly decline of 0.7%, which was the first such loss in five weeks, according to FactSet data.
Friday’s moves in metals come after the U.K. parliamentary elections late Thursday delivered a stunning result: a hung parliament, in which neither the Conservative nor Labour Party holds a parliamentary majority. Now, U.K. Prime Minister Theresa May will attempt to form a minority government, where her Conservative Party would need to rally outside support in each parliamentary vote.
“There is no doubt that the U.K. election outcome has brought the uncertainty to its climax, but the fact remains that it is only a domestic issue,” said Naeem Aslam, chief market analyst at ThinkMarkets. “Hence, traders are not so much concerned about this.”
Against that backdrop, however, gold declined, with the dollar, as measured by the ICE U.S. Dollar Index DXY, +0.07% strengthening by 0.4%. A stronger dollar can provide a headwind for gold, and other commodities priced in the currency, making it more expensive to buyers using other monetary units.
“Technically, gold failed at $1,300 and became a little overbought in the near term, ” said Bill Baruch, chief market strategist at iiTRADER. The focus for gold is now next week’s U.S. Federal Reserve meeting, and “the dollar is undervalued as are Treasury yields,” he said.
The Fed’s two-day meeting will wrap up on June 14, where a dollar-supportive rate increase is expected. Wall Street is pricing in a 99.6% chance of a lift to benchmark rates in June, which would follow the European Central Bank’s decision on Thursday to keep its rates steady.
Investors also further digested Thursday’s highly anticipated Senate hearing featuring former Federal Bureau of Investigation Director James Comey, whose May 9 firing by President Donald Trump as the intelligence official probed Russia’s ties with officials in the president’s administration, has created a political firestorm.
“Comey’s testimony didn’t result in the fear trade many worried about leading up to the hearing,” said Adam Koos, president of Libertas Wealth Management Group.
And “while we’re living in the seasonally weak months of the year for the stock market, prices on the equity side continue to defy the force of gravity, at least for now, which is holding gold prices at bay,” he said. Benchmark U.S. stock market indexes, like the S&P 500 index SPX, -0.08% and the Dow Jones Industrial Average DJIA, +0.42% trade higher month to date.
Meanwhile, July silver SIN7, -1.34% gave up 19.1 cents, or 1.1%, to end at $17.223 an ounce, for a 1.7% weekly decline. July copper HGN7, +1.34% added 4 cents, or 1.5%, to $2.650 a pound, scoring a weekly rise of 2.9%. July platinum PLN7, +0.22% settled at $940.30 an ounce, up $2.20, or 0.2%, for the session, but down 1.4% for the week, while September palladium PAU7, +1.14% added $9.70, or 1.2%, to $856.20 an ounce, up about 2.7% on the week.
In exchange-traded funds, SPDR Gold Trust GLD, -0.91% was off 0.8%, the VanEck Vectors Gold Miners ETF GDX, -1.68% traded 1.3% lower, while silver ETF, iShares Silver Trust SLV, -1.27% was down 1.2%. Among those ETFs, only the GDX was set for a weekly gain.
Source: MarketWatch
