The precious metal only managed to briefly pare some of its earlier losses, as the dollar’s weakness in the immediate wake of cooler-than-expected U.S. ISM manufacturing and consumer-sentiment readings proved to be short lived.
April gold GCJ9, -1.34% fell $16.80, or 1.3%, to $1,299.20 an ounce near its intraday low of $1,299.40. It was set for the lowest most-active contract settlement since Jan. 25, according to FactSet data. For the week, bullion was set to fall about 2.3%, which would represent the worst weekly percentage decline for a most-active contract since the week ended Aug. 17.
On Friday, data showed the final reading of the University of Michigan consumer sentiment index faded in February, with a 93.8 reading, below the MarketWatch-compiled economist consensus of 95.6. American manufacturing grew their businesses in February at the slowest pace since the election of President Donald Trump in November 2016, with the ISM manufacturing survey falling to 54.2 in February from 56.6.
The weaker-than-expected data prompted the dollar, as measured by the ICE U.S. Dollar DXY, +0.26% to give up its earlier gains, but it has since moved higher, looking to erase nearly all of its weekly loss. The index was up 0.3% at 96.431. Strength in the greenback can pressure prices for gold, which are traded in the dollar.
Performance for the metal was weak overall. “Gold’s recent performance indicates that markets are pricing in the increased likelihood of a U.S.-China trade deal happening sooner rather than later,” said Lukman Otunuga, research analyst at FXTM. Also, “investors are hopeful that the much-feared no-deal Brexit will be avoided, ultimately supporting risk appetite.”
“However, the end result for either of these major risks remains uncertain at this point in time,” said Otunuga, in a daily note. “Concrete and positive resolutions may result in a surge in demand for riskier assets and conversely be negative for gold. It should also be kept in mind that gold bulls remain inspired by geopolitical risk factors and speculation over the [Federal Reserve] taking a break on monetary tightening this year.”
For now, upward momentum in assets perceived as risky, like stocks, have drawn some demand away from precious metals, which are viewed as havens. The Dow Jones Industrial Average DJIA, +0.32% and the S&P 500 index SPX, +0.47% traded higher on the first day of the month.
Gold lost about 0.7% in February, based on the most-active contract, following four consecutive months of gains. Gold-backed exchange-traded fund SPDR Gold Shares GLD, -1.15% was down by 0.9% for the session, set to end the week 2.1% lower.
May silver SIK9, -2.42% traded at $15.27 an ounce, down 2.3% for the session so far, with prices set to lose around 4.6% for the week. May copper HGK9, -0.54% traded at $2.934 a pound, trading down 0.5% for the day and the week.
The SPDR Gold Shares (GLD) was trading at $122.52 per share on Friday afternoon, down $1.47 (-1.19%). Year-to-date, GLD has declined -0.91%, versus a 5.27% rise in the benchmark S&P 500 index during the same period.
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