Gold futures gain, but still drop nearly 1.7% for the week

Gold futures scored a gain Friday, but still suffered a loss for the week—the first in three weeks—pressured by overall strength in the U.S. dollar.

Some of the latest U.S. economic data may raise the probability of higher interest rates, which also tend to pressure prices for the precious metal.

Gold for June delivery GCM6, +0.24% added $1.50, or 0.1%, to settle at $1,272.70 an ounce, after trading between a high of $1,277.70 and low of $1,264 Friday. The contract saw a nearly 1.7% weekly decline, which was the first loss since the week ended April 22.

July silver SIN6, +0.16% tacked on 2.9 cents, or 0.2%, to end at $17.132 an ounce. It saw a 2.3% weekly drop.

Prices for gold and silver have suffered on the back of a stronger U.S. dollar. Commodities priced in dollars often trade inversely with the dollar, as moves in the U.S. unit can influence the attractiveness of those commodities to holders of other currencies.

The ICE U.S. Dollar Index DXY, +0.44% rose again Friday and was set for a weekly climb of roughly 0.8%. The greenback rallied after data showed that U.S. retail sales climbed by 1.3% in April, the largest monthly gain in a year. The University of Michigan’s consumer sentiment index also surged 7.6% to early May.

Upbeat economic data are supportive of a Federal Reserve interest-rate hike. Higher interest rates can help boost the U.S. dollar and, in turn, weigh on dollar-denominated commodities such as gold.

“The dollar rally has dented gold, but it’s not like the bullion market walked under a ladder, broke a mirror, or crossed a black cat this Friday 13th,” said Adrian Ash, head of research at BullionVault. “Gold priced in most other currencies is flat or higher on the week, supported again by [exchange-traded fund] inflows and bullish speculation in Comex futures.”

On Friday, the gold ETF SPDR Gold Trust GLD, +0.45% added 0.4%, while silver-focused iShares Silver Trust SLV, +0.37% was 0.3% higher.

“Word is that allocated holdings of physical metal continue to grow amongst wealth managers too, and it’s that big money which really counts for gold prices,” said Ash. Meanwhile, “Asian demand remains notable by its absence, but that’s nothing new as summer begins.”

Indian and Chinese demand both suffered from the price jump in the first quarter, as the World Gold Council’s latest report shows, as well as from economic issues, said Ash. “So while weak summer demand shouldn’t prove a drag on rallies, it could pose a risk if this consolidation fails and prices fall back in search of a floor.”

Tracking movements in other Comex metals, July copper HGN6, +0.17% ended about flat at $2.074 a pound, for a weekly loss of 3.7%. July platinum PLN6, +0.00% finished at $1,052.10 an ounce, down $1.90, or 0.6%. It was around 3% lower for the week. June palladium PAM6, -0.59% fell $4.25, or 0.7%, to $592.40 an ounce, down roughly 2.4% on the week.

Source: MarketWatch