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Gold prices settle higher, but post fourth straight weekly decline

Gold futures settled higher on Friday, after briefly falling on the back of better-than-expected U.S. jobs data, but posted a fourth straight weekly loss as overall strength in the US dollar putting pressure on commodity prices.

The precious metal only managed to recoup a small portion of the losses on Friday that dragged prices to their lowest level in more than nine months this week.

price action
  • August or GCQ22,
    -0.08%

    GC00,
    -0.08%
    tacked on $2.60, or nearly 0.2%, at $1,742.30 an ounce. Prices for the most active contract, which stood Wednesday at their lowest since the end of September 2021, marked a weekly loss of 3.3%, according to Dow Jones Market Data.

  • September silver SIU22,
    -0.01%

    SI00,
    -0.01%
    added 5 cents, or nearly 0.3%, to $19.236 an ounce, ending down 2.2% for the week.

  • October platinum PLV22,
    +0.10%
    settled at $882.80 an ounce, up $17, or 2%, for the session and 1.3% for the week.

  • September PAU22 palladium futures,
    +0.53%
    added $163.20, or 8.2%, to $2,156.60 an ounce, with the contract showing a weekly gain of more than 11%.

  • Copper futures for September HGU22,
    -0.06%
    edged down 5 cents, or 1.4%, to $3.522 a pound, losing 2.3% for the week. Prices settled Wednesday at their lowest since November 2020.

What analysts say

Gold continues to be impacted by the strength of the US dollar, said Colin Cieszynski, chief market strategist at SIA Wealth Management. For much of this week, the strength of the U.S. dollar “has been linked to capital leaving foreign markets and seeking refuge in the United States.

The ICE US Dollar DXY Index,
-0.22%
was down little changed in Friday’s trading, but on track for a 1.8% weekly gain.

Dollar strength is being driven by a rise in U.S. Treasury yields as the Federal Reserve raises interest rates to fight inflation while the labor market remains healthy, Cieszynski told MarketWatch.

The United States added 372,000 bigger-than-expected new jobs in June, according to government data released Friday.

See: The United States creates 372,000 jobs in June with a strong labor market, a bulwark against the recession

“Gold fell slightly on the news, but more importantly, US Treasury yields rose. The rise in US bond yields at the end of the week suggests that the market is bringing inflation concerns back to the forefront of the market, and possibly on par with recession-related worries,” Jim Wyckoff, principal analyst at Kitco.com, said in a note.

The 10-year Treasury yield TMUBMUSD10Y,
3.084%
was up 6 basis points to 3.068% in Friday trading.

Next week, dollar action could continue to be an important driver for the gold market, Cieszynski said. “There are a number of key inflation reports ahead that could move the market, including Chinese inflation figures due over the weekend and reports on consumer price inflation and to production in the United States during the week.”

So far, 2022 has proven ‘ugly’ for traders in everything but the energy sector, with the dollar soaring as inflation and the Fed ‘cut the grass under all markets leveraged,” said Adrian Ash, director of research at BullionVault, with gold trading down year-to-date.

Lily: Here are some of the challenges facing gold investors in the second half of 2022

This week’s gold loss “still puts the precious metal well ahead of stocks, bonds or base metals for 2022 so far, let alone crypto,” Ash told MarketWatch.

Action in exchange-traded fund holdings of gold ‘does not suggest any sort of outflow rush, and bullion is likely to attract further inflows if the fall in global stock markets drags on into the second half of this year, led by growing stagflation prospects,” he said.

Meanwhile, palladium stood out, with prices rising for the third week in a row.

“Recently, the palladium market has been immune to significantly negative macroeconomic psychology as well as panic selling off physical commodities,” Zaner analysts wrote in Friday’s newsletter.

In a note earlier this week, Macquarie analysts said platinum group metals, particularly palladium, “should at least benefit from potential countercyclicality in the automotive sector, as pent-up demand supports sales once supply disruptions will have eased.”

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