Gold futures climbed on Friday to score a weekly and monthly advance, with prices back above the 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. personal 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.
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 slipped below that level by the end of Thursday’s session.
“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, settled at their highest since Jan. 7, up about 7.8% for the month, notching a weekly advance of 1.5%, according to Dow Jones Market Data.
Silver, meanwhile, saw its July contract
move up 7 cents, or 0.3%, to $28.01 an ounce. It finished around 1.9% higher for the week, and up 8.3% 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 Friday, up nearly 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 0.3% to $4.68 a pound, settling 4.4% higher for the week and up 4.7% for the month.
rose 0.3%, to $1,182,40 an ounce, ending 1.1% higher for the week, but suffering a monthly decline of 1.9%. September palladium
climbed 0.7% to $2,830.13 an ounce , with prices up 2% for the week, but down 4.2% in May.