Gold on pace to have a small weekly loss due to dollar strength

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February 8, 2019 1:33pm NYSE:GLD

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From Myra P. Saefong: Gold prices edged higher on Friday, paring an already modest weekly loss as weakness in global stocks boosted haven demand for the precious metal.


“Gold is trading steady on worries that a prolonged Sino-U.S. trade war could worsen global economic slowdown, but a strong dollar has put the yellow metal in line for its first weekly loss in nearly a month,” said Dean Popplewell, vice president of market analysis at Oanda, in a Friday note.

April gold GCJ9, +0.38%  on Comex was up $3.10, or 0.2%, at $1,317.30 an ounce, leaving it down 0.4% for the week. Gold has still climbed by 2.3% since the end of last year.

March silver SIH9, +0.65%  added 4.2 cents, or 0.3%, to $15.755 an ounce with prices down 1.1% for the week.

Gold bulls said growing concerns about global growth should provide underlying support. The European Central Bank last month took a more dovish-than-expected stance amid continued weakness in European data, while the Federal Reserve last week surprised investors with a dovish pivot, putting future rate moves on hold until further notice. The Reserve Bank of Australia has also struck a dovish tone and the Bank of England on Thursday offered a downbeat outlook for growth amid Brexit uncertainty.

“The fact that we are seeing major central banks turn dovish at the same time is probably alarming for some investors, which may explain why stocks have failed to sustain their rally. But this is good news for bonds and therefore noninterest-bearing and low-yielding assets such as gold and silver,” said Fawad Razaqzada, market analyst at Forex.com, in a note.

“What’s more, with the dollar index having just completed a six-day rally, you would think that these dollar-denominated metals would simultaneously be down for the same number of days. However, over the last six trading days, gold has only been down on three occasions, while silver has been down on 5 occasions, although higher today,” he said.

The ICE U.S. Dollar Index DXY, +0.03% a measure of the U.S. currency against a basket of six major rivals, was up less than 0.1% on Friday, but set for a weekly rise of 1%. A stronger dollar can be a negative for commodities priced in the unit because it makes it more expensive to users of other currencies.

U.S. benchmark stock indexes headed broadly lower, putting equities on track for a three-day losing streak.

In other metals trade, April platinum PLJ9, +0.64%  was up 0.3% at $799.30 an ounce–looking at a weekly decline of 3.3%. March palladium PAH9, +0.97%  rose 1.1% to $1,372.40 an ounce, headed for another record settlement and a weekly gain of 4.5%.

March copper HGH9, -0.67%  was off 0.1% at $2.825 a pound, poised for a weekly gain of 1.9%.

Among the exchange-traded funds, SPDR Gold Shares GLD, +0.42%  added 0.3%, though trading 0.3% lower on the week.


The SPDR Gold Shares (GLD) was trading at $124.32 per share on Friday afternoon, up $0.58 (+0.47%). Year-to-date, GLD has gained 0.54%, versus a 1.16% rise in the benchmark S&P 500 index during the same period.

GLD currently has an ETF Daily News SMART Grade of B (Buy), and is ranked #1 of 35 ETFs in the Precious Metals ETFs category.


This article is brought to you courtesy of MarketWatch.


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