Gold futures fell back on Friday, after posting a modest climb a day earlier for the first time in 11 sessions, with expectations that the U.S. Federal Reserve will soon lift interest rates helping to prices position themselves for a weekly loss of more than 4%,
August gold fell $11.50, or 1.1%, to $1,082.60 U.S. an ounce on Comex. Prices, which settled Thursday with a gain of 0.2%, traded down by about 4.3% for the week. Wednesday’s settlement of $1,091.50 U.S. was the lowest in more than five years
Gold prices are already trading nearly $50 U.S. an ounce lower from last Friday’s settlement.
Fed Chairwoman Janet Yellen recently reiterated the central bank’s plans to increase borrowing costs this year, prompting traders to adjust their expectations for the path of U.S. monetary policy and its impact on gold prices. Higher interest rates also tend to support the dollar which is bearish for dollar-denominated prices of gold.
Gold doesn’t produce an income and costs money to hold, and would struggle to compete with such yield-bearing assets as Treasury bonds when rates climb.
U.S. data released Friday showed that the flash reading of the Markit manufacturing purchasing managers index rose slightly to 53.8 in July from a 20-month low of 53.6 in June. Sales of new single-family homes in the U.S. fell 6.8% in June to an annual rate of 482,000. Against that backdrop, the ICE U.S. dollar index traded about 0.3% higher.
Other metals declined Friday, with September silver sinking 33.1 cents, or 2.3%, to $14.37 U.S. an ounce, down around 3.2% for the week.
September high-grade copper traded at $2.368 U.S. a pound, down 1.8 cents, or 0.8% — set for a weekly loss of roughly 5.2%. October platinum was down $8.40, or 0.8%, at $972.90 U.S. an ounce, ready for a weekly loss of 2.9%, while September palladium fell $4.90, or 0.8%, to $612.95 U.S. an ounce, down about 0.9% on the week.
