Gold futures edged higher on Friday, heading for a weekly and monthly advance, with prices hovering around the psychologically important level at $1,900 an ounce.
“Gold has enjoyed the return of inflation in the economic data of May and capital flows have returned to drive higher as [bitcoin] has experienced up and down volatility,” Jeff Wright, chief investment officer at Wolfpack Capital, told Market Watch.
Data released Friday showed the headline U.S. consumption expenditure inflation measure climbed 3.6% in April from the prior year, the strongest reading since 2008 and higher than the 2% preferred by the Federal Reserve. The data, however, failed to provide support for gold prices Friday.
For gold, the biggest influences and concerns are interest rates, and if or when the Fed will taper asset purchases, then inflation and employment data, said Wright.
Gold futures on Wednesday settled above the $1,900 mark for the first time since early January, to turn higher for the year, but have since eased back from that price level.
“Gold has some large resistance above $1,900 before even contemplating a run to $2,000” and, while possible, a climb to $2,000 is “not likely with current economic data trends,” said Wright. “
Prices, based on the most-active contract, trades more than 7% higher for the month and were looking at a weekly advance of around 1%, FactSet data show.
Silver, meanwhile, saw its July contract
move up by a penny to $27.95 an ounce. It trades around 1.6% higher for the week, and up nearly 8% for the month.
The rise in precious metals prices this week has been helped by a weak U.S. dollar DXY, but the currency was gaining momentum higher Friday, up 0.1%. A weaker dollar can make assets priced in that currency more attractive to overseas investors. For the week, the DXY is little changed.
A slide in the yield on the 10-year Treasury note TMUBMUSD10Y had also helped buoy gold buying. Falling yields can benefit precious metals and other commodities, which don’t offer a coupon, by reducing the opportunity cost of holding those assets against yield-bearing investments.
Rounding out action among the Comex metals, July copper
tacked on 0.2% to $4.67 a pound, trading more than 4% higher for the week and month.
was up by a dime $1,179.20 an ounce, trading around 0.8% higher for the week, but looking at a weekly decline of over 2%. September palladium
was up 0.4% to $2,828.23 an ounce , with prices up 1.3% for the week, but down 4.7% in May.