Gold futures climbed Friday morning and were headed for a second straight weekly gain, as weakness in Europe’s economy and geopolitical unrest helped to buttress the haven commodity’s price.
“Gold is rising as Europe stagnates, trade uncertainty persists and as the Hong Kong situation seems to be coming to a head,” wrote Edward Moya. senior market analyst at Oanda, in a daily research note.
December gold GCZ19, +0.36% gained $6.80, or 0.5%, to reach $1,470.50 an ounce on Comex, after sliding 0.7%, hitting its lowest since Nov. 13, according to FactSet data. December silver SIZ19, +0.21% added 5 cents, or 0.3%, to reach $17.12 an ounce, after slipping 0.3% a day ago.
For the week, the yellow metal is headed for a less than 0.1% weekly gain, its second straight weekly advance, while silver is on pace to book a weekly gain of 1%.
IHS Markit’s purchasing managers indexes for the eurozone area pointed to slowdown in economic growth, even as German data showed some signs of life. Meanwhile, the U.K.’s economic performance was the worst since July 2016, with manufacturing and services PMI both coming in below 50, a level that represents a dividing line between contraction and expansion.
On top of that, Britain faces a general election on December 12 as it attempts to exit from the European Union, which comes as Hong Kong is set to have District Council elections on Nov. 24., amid violent protests in the semiautonomous region that have played out for months.
Meanwhile, legislation on Hong Kong that allows for the U.S. to rescind Hong Kong’s special status is now being passed to President Donald Trump.
Those geopolitical events and fitful progress toward a U.S.-China trade agreement have supported the long-term bull case for bullion, even if it has retreated from a psychologically significant level at $1,500 in recent trade, commodity experts say.
Gains for gold and sliver also come as yields for haven bonds have been sliding, with the 10-year Treasury note TMUBMUSD10Y, -0.92% yield off by about 2 basis points at 1.75%. Lower yields can draw bids for gold compared against government debt because the asset doesn’t bear a yield.
“The market is in an extended period of consolidation at the bottom of the range, waiting for the next major catalyst to emerge,” wrote Stephen Innes, chief market strategist for the Asia region at AxiTrader, in a daily research report.