Gold climbs for second week in a row
Silver futures post a 1.9% weekly gain
Gold prices finished higher on Friday to log a second weekly gain in a row as demand for assets perceived as risky waned and the U.S. dollar touched its lowest level in about seven weeks.
Traders also eyed developments tied to a Republican-backed U.S. health-care bill, which could have wide-ranging influence in financial markets.
April gold GCJ7, +0.09% rose $1.30, or 0.1%, to settle at $1,248.50 an ounce, with the precious metal registering a 1.5% weekly gain. Meanwhile, the commodity’s sister metal, silver for May delivery, SIK7, +0.84% tacked on 15.5 cents, or 0.9%, at $17.748 an ounce, for a 1.9% weekly advance.
“The immediate short-term factor for gold will be whether the health-care bill will be passed,” said Paul Wong, senior portfolio manager at Sprott Asset Management.
The dollar and assets considered risky, like stocks, have been stalling out amid heightened concerns about President Donald Trump’s ability to put in place tax cuts and other pro-growth legislation, highlighted by the president’s struggle to get the House to pass a bill that would repeal and replace former President Barack Obama’s signature health-care law. A vote on the new health bill was slated for late Friday after a planned Thursday vote was postponed.
A pullback by the dollar, which has been trading around a seven-week low, has helped to give dollar-denominated gold prices a boost. As measured by the ICE U.S. Dollar Index DXY, -0.13% the buck was slightly lower Friday and staring at a 0.7% weekly decline.
If the health-care bill gets passed, “the market will see it as one hurdle out of the way for finally moving onto tax reform and other fiscal stimulus measures,” said Wong. In that case, bond yields should rise, the U.S. dollar should strengthen, and the “reflation trade should see some tailwind in the short term. Gold will back off.”
But if the bill does not get passed, “the opposite is likely and gold should rise,” he said.
Meanwhile, the U.S. Federal Reserve and its intentions surrounding the future path of interest rates are also under focus, said Naeem Aslam, chief market analyst at ThinkMarkets.
“The Fed is dovish, but still on track to increase the interest rate two more times this year,” he said. “Simply put, you can say this is a dovish hike and gold traders like this news.”
On Friday, St. Louis Fed President James Bullard said U.S. labor market improvement is slowing down. U.S. data on core durable goods “has shown that the economy is strong, but this is not something which is going to excite the Fed that much,” said Aslam.
In other metals trading, May copper HGK7, -0.42% fell 0.5% to $2.631 a pound, ending about 2.3% lower on the week. April platinum PLJ7, +0.50% rose 0.4% to $967.90 an ounce, with prices logging a weekly gain of 0.5%, while May palladium PAM7, +1.36% rose 1.7% to $813.35 an ounce, up 5.8% on the week.
In exchange-traded funds, the SPDR Gold Trust GLD, +0.14% was up 0.2%, about 1.6% higher for the week, the VanEck Vectors Gold Miners ETF GDX, -0.37% fell 0.3%, but rose 1.4% for the week, while the iShares Silver SLV, +0.69% gained 0.7%, lifting its weekly gain to 1.9%.