The political uncertainty that had been driving gold prices quelled Friday, sending gold prices downward after a day of strong gains.
Equity markets reacted poorly to the political climate Thursday, sending gold upwards. Much of the fear wore off by Friday, shunting the gains of gold seen earlier in the week
“Gold is close to its recent multi-month high despite the strong dollar, due to an increase in volatility on the equity markets and more uneasiness on the political front, which is supporting the search for safe-haven assets,” said Eugen Weinberg, head of commodity research at Commerzbank.
Spot gold slipped 0.09 percent to $1,237.61 per ounce, while U.S. gold futures dropped $2.40 to settle at $1,237.80.
Despite losses today, gold is on track for a third straight week of gains, rising about 7.5 percent in 2017.
Concern over Trump’s policies, as well as elections in the Netherlands, France, and Germany this year, fueled gold’s rise to a peak of $1,244.67 in February 8, the strongest in nearly three months.
“Dealers are extremely cautious about running the market higher as the March Fed rate hike debate will likely play out for the foreseeable future,” said Stephen Innes, senior trader at OANDA.
Prospects of a stronger dollar and U.S. Treasury yields after Fed Chair Janet Yellen said U.S. interest rates may need to be raised in March had dragged gold to $1,216.41 on Wednesday, its lowest since February 3.
The dollar index, which measures the greenback against a basket of currencies, rose 0.43 percent to 100.87 on Friday, recovering from a one-week low of 100.41 the day before.
“The market seems to be quite supported by investment inflows into the ETFs and I think this will be the most important factor through the year as we expect investors to keep pouring money into gold ETFs,” Weinberg added.
Commerzbank expects gold to hit $1,300 by year end.
Spot silver dipped 0.28 percent to $18.04 an ounce. The metal hit its strongest since November 11 at $18.13 in the previous session.
Platinum slipped 0.71 percent to $1004.90.
Palladium was down 1.5 percent to $780.40. The metal, used in emission-controlling catalytic converters for the automotive industry, touched its best since January 24 at $794.90 in the prior session. It has gained over 16 percent so far this year.
“Palladium still appears to be finding support from the still buoyant automotive economy. What is more, palladium ETFs have seen inflows of a good 20,000 ounces in the last two days,” Commerzbank analysts concluded in a note.