Gold prices settled lower on Friday, but held onto a modest gain for the week — their second in a row — on the back of overall weakness in the U.S. dollar.
Traders looked to U.S. inflation data and the outcome of the Federal Reserve’s monetary policy meeting, both due next week, as the catalysts for gold’s next big move.
Gold futures for August delivery
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fell $1.40, or nearly 0.1%, to settle at $1,977.20 per ounce on Comex, with prices based on the most-active contract up 0.4% for the week, according to Dow Jones Market Data.
Silver futures for July delivery
rose by 6 cents, or almost 0.3%, to $24.41 per ounce, with prices up 2.8% for the week.
Palladium for September delivery
declined by $53.50, or 3.9%, to $1,304.80 per ounce, ending down 7% for the week, while platinum for July delivery
fell by $1.10, or 0.1%, to $1,012.80 per ounce, with prices up 0.9% from the week-ago finish.
Copper for July delivery
shed 0.2% to settle at $3.79 per pound, tacking on nearly 1.7% for the week.
The pullback in gold prices Friday was likely due to a combination of profit taking with concerns about the Fed’s decision next week and next month on interest rates, as well as inflation numbers also due next week, said Adam Koos, president at Libertas Wealth Management Group.
Investors are “nervous,” he said. “Owners of the yellow metal don’t want to see their portfolios implode because of a surprise Fed statement, so caution is the name of the game this next few trading days.”
Indeed, the metal’s move comes ahead of a busy week with the Fed policy meeting and U.S. economic data.
A reading of the consumer price index for May will be released Tuesday, while producer price index data come out Wednesday. The Fed Open Market Committee’s two-day policy meeting will conclude Wednesday with a policy announcement. See the U.S. economic calendar
“Although markets widely expect the Fed to rates unchanged, a hot CPI report before the decision on Wednesday could strengthen hawks, leading to a potential surprise,” Lukman Otunuga, manager, market analysis at FXTM, told MarketWatch.
U.S. weekly jobless claims spiked higher to levels not seen since October 2021, according to data from the Labor Department released Thursday. That raised expectations around the Fed pausing interest-rate hikes “down the road,” said Otunuga. Nevertheless, the precious metal is likely to remain “trapped within a range” ahead of the U.S. inflation data and Fed decision.
Chintan Karnani, director of research at Insignia Consultants, expects gold prices to rise if the CPI and PPI readings are lower, as that would suggest a Fed pause in rate hikes. He believes the FOMC meeting “will be relevant only if inflation comes in higher.
Still, for the week, dollar-denominated gold got a boost from an overall decline in the U.S. dollar, with the ICE U.S. Dollar Index
a closely watched gauge of the dollar’s strength against major currencies, trading at 103.54 in Friday dealings, up 0.2% for the session, but down 0.5% for the week.