Gold prices on Friday held ground at their highest levels since August as expectations that the Federal Reserve might slow the pace of interest-rate hikes in December have helped to boost the yellow metal, and have weighed on the U.S. dollar.
Price action
- Gold futures for December GCZ22, +0.71% GC00, +0.71% rose $11.50, or 0.7%, to $1,765.20 per ounce on Comex — the highest level for an most-active gold contract since August. Prices for the contract look to end the week more than 5% higher, FactSet data show.
- Silver futures SIZ22, -0.68% SI00, -0.68% for December fell 9.7 cents, or 0.5%, to $21.605 per ounce, but were poised to tally a weekly gain of around 4%.
- Palladium futures PAZ22, +3.62% for December rose $51.80, or 2.7%, to $2,006 per ounce, while platinum futures PLF23, -0.83% for January fell $7.90, or 0.8%, to $1,047.10 per ounce.
- December copper HGZ22, +3.51% rose 13.3 cents, or 3.6%, to $3.8915 per pound.
What’s happening
Gold rallied sharply on Thursday as the dollar tumbled to a more than two-month low, largely driven by the U.S. October consumer-price index data released Thursday, which helped stoke expectations that the dollar may have reached its peak, or at least is close to it.
The ICE U.S. Dollar Index DXY, -1.30% was down 1.2% at 106.869 in Friday dealings, eyeing a weekly loss of about 3.6%.
The dollar index continued to trade lower after data Friday showed the University of Michigan’s gauge of the U.S. consumer’s outlook fell 5.2 index points in November from 59.9 in October. Inflation expectations for the next year rose to 5.1% from 5% in the prior month, while five-year inflation expectations rose to 3% from 2.9% in October.
“Soaring prices are choking the global economic growth, which could also impact demand for metals,” Fawad Razaqzada, market analyst at City Index and FOREX.com, told MarketWatch.
“Gold has had a stellar week, but everything now [hinges] on the dollar,” he said. “The greenback is not dead, I don’t think.”
“The one eyed is still the king in the land of blinds, so I won’t expect to see further significant weakness in the dollar,” said Razaqzada, loosely referencing an old proverb to show that the greenback is still a standout despite its recent pullback. If the dollar does not see significant weakness from here, that “should hold gold back.”
Next week, the focus for gold will “turn to growth as we will have retail sales from China and the U.S. and GDP from Eurozone, among other things,” said Razaqzada.
Also on Comex Friday, prices for copper climbed as some signs that China may be easing back on its zero-COVID policy, which fueled optimism over demand for the industrial metal.
Read: ‘Era of cheap’ copper prices may be coming to an end