Gold settles lower Friday, as dollar strength pulls prices to the lowest finish in over a week
New York (Jun 13) Gold futures declined on Friday, with strength in the U.S. dollar helping to send prices to their lowest finish in more than a week.
Prices have been pressured lower in part by solid gains in the U.S. dollar index on Friday, as well as some more “routine” profit taking from shorter-term futures traders, said Jim Wyckoff, senior analyst at Kitco.com, in a daily note.
The ICE U.S. Dollar Index DXY, +0.48%, a measure of the currency against a basket of six major rivals, rose 0.6% Friday, on track for a weekly rise of 0.4%. A stronger dollar can weigh on commodities priced in the currency, making them more expensive to users of other currencies.
Gold is “continuing to exhibit strength,” Peter Spina, president and chief executive officer at GoldSeek.com. Gold price corrections haven’t been sustained, and are well supported — “an excellent sign of strength.”
Gold for August delivery GC00, -0.01% GCQ21, -0.01% fell $16.80, or 0.9%, to settle at $1,879.60 an ounce on Comex Friday — the lowest settlement since June 3, FactSet data show. Prices based on the most-active contracts settled down about 0.7% for the week.
July silver SIN21, -0.34% SI00, -0.34% rose 12 cents, or 0.4%, to nearly $28.15 an ounce, ending 0.9% higher for the week.
Gold prices were lower year to date, but have climbed by more than 9% for the quarter so far.
The main driver for gold’s strength are “real yields, which are falling as inflation heads higher and yields fall,” and the 10-year Treasury yield TMUBMUSD10Y, 1.452% is looking vulnerable to a breakdown towards the 1% area, Spina told MarketWatch.
“This would light a fire in gold and shoot it above $2,000 and likely to new record highs,” with the next price target at more than $2,500 over the coming six to 12 months.
Gold has seen “stiff resistance” near the 2011 peak for prices, below $1,900, but it might be ready to take out the resistance level in coming sessions, he said. Expect “more volatility until then.”
MarketWatch
