Market Watch – Gold set to book its best weekly advance in 5 weeks

Commentary, News

Silver, most industrial metals gain

Gold prices traded near break-even levels Friday, as U.S. stocks moved higher, highlighting a pause on the haven demand that has supported the yellow metal over the past several sessions.

The precious metal was on track to post a roughly 2% advance for a week, marked by rising volatility and political unrest in the White House. That would be the largest weekly gain since mid-April.

June gold GCM7, +0.04%  moved between narrow gains and losses Friday, and was last up 50 cents, or less than 0.1%, at $1,253.40 an ounce.

Gold futures on Thursday halted their longest winning streak since August as a flight-to-safety move waned when stocks and the U.S. dollar stabilized, even as uncertainty continued to surround President Donald Trump. The dollar and stocks diverged Friday, with a major index tracking the greenback trading in the red.

The ICE U.S. Dollar Index DXY, -0.64%  fell 0.6% as its drop this week wiped out the postelection climb. Also Friday, U.S. stocks traded mostly higher but the main indexes were still on track to end lower for the week.

Read: Market sentiment during Watergate shows how stocks might react to Trump

And: Trump knew Flynn was under investigation before hiring him: report

“The key question now is what will happen in the equity markets and the U.S. dollar,” said Fawad Razaqzada, technical analyst at “If stocks and the dollar both manage to show relative strength again, then this should pressurize the buck-denominated and perceived safe-haven gold.”

But “gold will remain in demand should risk sentiment stays cagey,” he said, noting that there were “no obvious triggers” that would change sentiment one way or the other Friday.

Meanwhile, Carsten Fritsch and the commodities team at Commerzbank, pointed out in a note that “it is not only the stock markets and bond yields that have fallen further amid the latest political events in the U.S.”

“The VIX index VIX, -17.87% which serves as a barometer of fluctuations of the S&P 500 index, has surged over the past two days, which reflects the uncertainty among market participants. A good week ago, the VIX index was still at its lowest level since the end of 1993,” they said.

“In addition, the market now only rates the probability of the U.S. Fed raising interest rates at its next meeting in mid-June as being roughly 70%,” the analysts said. That’s down from nearly 100% odds priced in earlier this month. Higher rates make nonyielding gold less appealing relative to other investments.

For now, market uncertainty leaves gold stuck between so-called key support and resistance levels, said Razaqzada.

“Specifically, support is being provided by the 50- and 200-day moving averages at around the $1,245-$1,248 area, while resistance…sits at $1,265,” he said. “If support at around $1,245 breaks decisively, then the next bearish objective would be $1,237, which was previously resistance. Thereafter, the bullish trend line would come into focus.”

In other metals, July silver SIN7, +0.66%  rose 12 cents, or 0.7%, to $16.79 an ounce and July copper HGN7, +1.76%  rose 4.2 cents, or 1.6%, to $2.573 a pound. July platinum PLN7, +0.60% rose $6.10, or 0.7%, to $942.90 an ounce, but June palladium PAM7, -0.37%  declined 65 cents, 0.1%, to $764.80 an ounce.

In exchange-traded funds, the SPDR Gold Trust GLD, +0.31%  rose 0.3%, ready for a weekly gain of 2%, while the VanEck Vectors Gold Miners ETF GDX, +1.16%   added 1.1%, trading about 0.8% higher on the week. The iShares Silver Trust SLV, +1.12% was up 1.1% for the day, set for a 2.1% rise for the week.

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