Gold fall from session highs, but hold onto a gain for the week

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Gold futures edged lower in Friday’s trade but remained on track to post gains for the week – their fifth in six weeks.

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The precious metal prices were earlier supported by an overall weakness in the US dollar and a decline in US retail sales and consumer sentiment readings.

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Gold prices climbed after Friday’s “disastrous US retail sales report”, but have since declined, under pressure “taking profit against the news and ahead of a long weekend”, said Colin Czynski, chief market strategist at SIA Wealth Management. he said. ,

However, Sona told Businesshala: “Overall, gold has risen well this week due to a number of factors.” These include “weakening investor confidence, sending riskier markets such as stocks and cryptocurrencies back to defensive bases such as gold, and the US dollar softening slightly,” the natural adversary of gold.

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Gold’s “long-term role as an inflation hedge” [and] “Store of value” has also returned to the fore, Cieszynski said, with the US printing its highest consumer price inflation number since 1982, and producer price inflation approaching 10%.

On last check, February Gold GCG22,
-0.21%

GC00,
-0.21%
It traded at $1,817.30 an ounce, down $4.10, or 0.2%, after trading as high as $1,829.30 during the session.

Gold prices were more time spent in US retail sales falling 1.9% in December after data, and a closely-followed gauge of consumer sentiment, fell to 68.8 in January, from 70.6 in the previous month. Meanwhile, December industrial output declined 0.1%.

For the week, gold is seeing a 1.1% weekly gain, after falling 1.7% in the week ended January 7. Earlier, gold futures had posted four consecutive weekly gains.

March Silver SIH22,
-0.98%

SI00,
-0.98%
It fell 25.7 cents, or 1.1%, to $22.905 an ounce, marking its weekly rise of 2.2%.

Investors are gearing up for tighter US monetary policy in the coming months and are concerned about how effective central banks will be in tackling inflation, which is above trend.

“However, the release of higher Consumer Price Index and Producer Price Index this week has made market expectations more aggressive.” [Federal Reserve]“There is an underlying sentiment that the Fed will continue to act with caution,” said Jeff Klerman, portfolio manager at GraniteShares, which offers the GraniteShares Gold Trust bar,
-0.28%,

“And while the Fed may raise rates more aggressively than previously expected, long-term real rates are struggling to move beyond negative territory, supporting gold prices,” he told Businesshala.

Meanwhile, the dollar, as measured by the ICE US Dollar Index DXY,
+0.44%,
Was up 0.4% in the session so far but down 0.6% in the week. A weaker greenback could make dollar-denominated bullion less expensive for foreign buyers.

The US currency declined in relation to other majors during the week, “as the market is already paying the price for tightening policies. [Fed] In the value of the greenback, turn your attention now to other central banks that have yet to start cutting stimulus,” wrote ActiveTrades senior analyst Ricardo Evangelista in a daily note.

Fed Gov. Christopher Waller recently suggested that five interest rate hikes are likely in 2022 as central banks aim to largely repel inflation. The policy makers, however, said their baseline expectation was three rate hikes in a year, which is more in line with expectations.

Also on Thursday, Philadelphia Fed President Patrick Harker said that “a fair amount of tightening is expected in 2022”. Speech on the economic outlook at a conference sponsored by the Philadelphia Business Journal,

Strategists have said gold has been relatively resilient in the face of volatile financial markets, which are seeing the prospect of higher borrowing costs, which could pull down the precious metal’s value, but the prospect of perky inflation and central bankers’ errors has driven buying. has been supported, strategists have said.

Precious metals have traditionally been viewed as a hedge against inflation.

Increase in Treasury Yield with the 10-Year Treasury Note TMUBMUSD10Y,
1.767%
The yield, of around 1.74%, could also quell hunger for gold, which competes with gold for safe-haven demand and may be considered more compelling if rates rise.

But an increase in Treasury yields has failed to drive gold prices down significantly, despite FOMC minutes released last week “removing the Fed’s intention to ease and thus raise rates sooner than previously expected.” does,” Klerman said. So far this year, gold futures are down about 0.6%.

“The current environment, despite a more aggressive Fed, supports gold prices,” Klerman said. “Fears of a fall in asset prices and long-term real rates still remain well below zero lending support to gold prices.”

Among other Comex metals, March Copper HGH22,
-2.65%
Price fell 2.6% to $4.427 a pound, with prices on track for a weekly increase of 0.4%. April Platinum PLJ22,
-0.49%
$966.90 an ounce, down 0.6%, about 1.1% higher for the week, and March palladium PAH22,
-1.01%
It traded at $1,869 an ounce, down 1.1% in Friday’s deal and down 3% for the week.

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