Gold futures firmed above $1,800 to close out the trading week, driven by easing inflation expectations and the anticipating that the Federal Reserve will pivot on its tightening efforts. But a strengthening greenback placed a ceiling in the yellow metal’s gains.
December gold futures rose $6.60, or 0.36%, to $1,8137.70 per ounce at 16:45 GMT on Friday on the COMEX division of the New York Mercantile Exchange. Gold prices will post a weekly boost of about 1.2%, paring their year-to-date decline to below 1%. This represented the fourth consecutive weekly gain, which is the longest active streak in about seven months.
Silver, the sister commodity to gold, climbed $20.50 to end the raucous trading week. September silver futures advanced $0.171, or 0.84%, to $20.52 an ounce. The white metal will also record an exceptional 3.3% weekly increase, trimming its 2022 drop of about 12%.
Investors are assessing gold’s potential upside now that the dollar is coming off fresh highs, yields are easing, and expectations that the central bank will reverse its tightening campaign.
Typically, a stronger buck is bad for commodities priced in dollars because it makes it more expensive for foreign investors to purchase. Moreover, a rising-rate environment lifts the opportunity cost of holding non-yielding bullion.
The US Dollar Index (DXY), which gauges the greenback against a basket of currencies, surged 0.59% to 105.71, from an opening of 105.09. The index is poised for a weekly loss of about 0.9%, but it remains up about 105% on the year.
Treasury yields were mixed on Friday, with the benchmark 10-year yield down three basis points to 2.858%. The one-year bill was flat at 3.255%, while the 30-year bond shed 3.1 basis points.
The spread between the two- and 10-year yields was more than -40 basis points This is a widely used recession indicator.
But while there is a growing expectation of the Fed reversing its series of rate hikes, many officials say that it is still too early to consider slowing down the pace of rate hikes or cutting the benchmark fed funds rate.
Tom Barkin, the Richmond Fed Bank president, noted that the Fed will likely keep raising rates, but it would be too soon to determine the size of next month’s increase. Minneapolis Fed Bank President Neel Kashkari also noted that the July consumer price index (CPI) was an indicator of the economy heading into the right direction, but the institution will still need to wait for additional numbers.
In other metal commodities, September copper futures shed $0.0445, or 1.2%, to $3.662 a pound. September platinum futures dipped $1.50, or 0.16%, to $958.00 an ounce. October palladium futures plunged $55.90, or 2.44%, to $2,232.50 per ounce.