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Gold futures edged lower on Friday, threatening to halt a six-session winning streak, but prices were on track to score the biggest weekly percentage gain since May.
Earlier this week, gold, silver, and platinum “all staged big breakout rallies, as their role as a store of value and a hedge against rising inflation came to the forefront, after both the U.S. and China reported inflation pressures increasing even more than expected,” Colin Cieszynski, chief market strategist at SIA Wealth Management, told MarketWatch.
Investors are “more concerned that higher inflation is not transitory after all and appears to be here to stay for a while, with commodity prices climbing, wages increasing and supply chain disruptions causing shortages,” said Cieszynski. Gold is traditionally thought of as a hedge against growing pricing pressures.
At last check, gold for December delivery
GCZ21,
GC00,
was down $1.60, or 0.1%, at $1,862.30 an ounce, following a 0.8% gain that helped to secure the metal’s highest settlement since June 14 and the longest stretch of consecutive gains since the six-day climb ended May 20.
Prices for the yellow metal briefly turned modestly higher after the University of Michigan’s reading on U.S. consumer sentiment Friday showed a fall to 66.8 this month from 71.7 in October, while expectations for 1-year inflation rose to 4.9%, it’s highest level since the summer of 2008, from 4.8% in October.
Futures for the yellow metal were still looking at a weekly gain of 2.5%, on track for the best weekly gain since the period ended May 7, FactSet data show.
Silver for December delivery
SIZ21,
SI00,
was trading 5.9 cents, or 0.2%, higher at $25.36 an ounce. For the week, silver was up 4.9%.
“Inflation is front of mind for investors this week after the U.S. CPI report, which has driven a sharp rally in gold and the US dollar,” wrote Neil Wilson, chief market analyst at Markets.com, in a daily note.
The dollar was edging lower but also is looking at a strong weekly gain, up 0.9%, as measured by the ICE U.S. Dollar Index
DXY,
Usually, dollar gains serve as a drag on dollar-priced assets such as gold but the greenback has been drawing some bids due to concerns that surging inflation might force the Federal Reserve into raising interest rates, which could make dollars more attractive to overseas investors.
On Wednesday, gold climbed 1%, finding support on the heels of a 0.9% jump in the U.S.consumer-prices index, which came in well above the 0.6% that economists expected. Annually, inflation climbed to 6.2%, the biggest jump in over 31 years.
Some experts say that gold’s gains may be limited if the dollar climbs in tandem on growing expectations that the Fed will forced to raise interest rates at a more rapid pace than had originally been anticipated.
“Gold is seen as a good hedge against inflation, so the rise in consumer prices would normally be likely to offer support to the precious metal. However, the differential in market expectations, regarding the timings for hiking rates, between the Fed and other major central banks, creates scope for further greenback gains, as the Federal Reserve looks set to start hiking in [2022], while elsewhere the picture isn’t as clear,” wrote Ricardo Evangelista, senior analyst at ActivTrades in a research note.
“This scenario is likely to keep supporting the U.S. dollar and therefore limit the upside for gold,” the ActivTrades analyst wrote.
In other Comex trading, December copper
HGZ21,
tacked on 0.6% to $4.426 a pound, poised for a weekly gain of around 1.9%.
January platinum
PLF22,
lost 0.9% to $1,084.70 an ounce, trading 4.7% higher for the week. December palladium
PAZ21,
rose 0.6% to $2,074.50 an ounce, eying a 2.2% climb for the week.
