Metals Stocks: Gold prices finish higher for day, and match sharpest weekly gain since 2011

Gold futures finished higher for the day and week on Friday as selling in stocks and sliding bond yields helped the precious metal to pick up $105.70 in the course of a week, marking the sharpest point and percentage gain over that period since 2011.

Trading was volatile intraday though with the metal on track for its best weekly gain since 2008 earlier in the session before prices turned down and then recovered.

Edward Moya, senior market analyst at Oanda, attributed the decline to “bullish exhaustion” in the wake of the recent rally.

“Gold trading will remain volatile as the world enters crisis mode,” he told MarketWatch. “While gold’s bullish case seems impenetrable, active traders need to be prepared for massive dips on bullish exhaustion.”

Fear about the economic impact of the coronavirus outbreak has driven appetite for assets perceived as havens, including bullion and government debt.

Gold for April delivery
GCJ20,
+0.48%

on Comex gained $4.40, or 0.3%, to $1,672.40 an ounce, after touching an intraday peak at $1,690.70. For the week, bullion advanced 6.79%, representing its largest weekly gain for a most-active contract since 2011, according to FactSet data.

May silver
SIK20,
-0.47%

shed 13 cents, or 0.7%, to settle at $17.263 an ounce. For the week, the white metal booked a 4.89% gain, based on the most-active contract.

“You do have a lot of people who are on margin, speculators leveraged and need to liquidate, or they get liquidated,” said Peter Spina, president and chief executive officer at GoldSeek.com. “Then you see these quick price drops. I believe it is not going to last and gold is readying for $1,700+ very soon.”

Prices for gold began to pare shaper early gains after data Friday revealed that the U.S. created 273,000 new jobs on February. The increase was surprisingly strong, compared with the 165,000 climb forecast by economists polled by MarketWatch, but the report was compiled ahead of the coronavirus contagion spread world-wide.

“February nonfarm payrolls does not reflect any impact of coronavirus. March will,” said Chintan Karnani, chief market analyst at Insignia Consultants. “At the moment, US jobs market is resilient to coronavirus. US corporate profitability is not immune to coronavirus.”

The move for bullion comes as 10-year
TMUBMUSD10Y,
0.745%

and 30-year Treasury debt yields
TMUBMUSD30Y,
1.269%

hit fresh lows, which tends to bolster demand for precious metals because falling yields make gold relatively more attractive to buyers.

The weekly climb for the precious metals also comes as Wall Street suffered from further declines on Friday, with Dow Jones Industrial Average futures
DJIA,
-2.12%

down over 600 points, while the S&P 500
SPX,
-2.90%

and Nasdaq Composite
COMP,
-3.04%

also down sharply.

The number of those affected by COVID-19, the infectious disease that was first identified in Wuhan, China in December, has increased world-wide, hit 100,000 on Friday, with cases falling in Asia but climbing in Europe and the U.S., where more than 230 cases have been reported.

On top of all that weakness in the U.S. dollar, which gold is priced in, has been another source of support for bullion. The dollar has declined more than 2% this week as measured by the ICE U.S. Dollar Index
DXY,
-0.87%
.
A weaker dollar can raise the appeal of dollar-price assets like gold to buyers using foreign currency.

Among other metals, May copper
HGK20,
-0.77%

fell 1.25 cent, or 0.5%, to end at $2.5605 a pound, with the industrial metal falling 0.8% for the week. April platinum
PLJ20,
+4.00%

gained $30.70, or 3.5%, to settle at $896.40 an ounce, and ended 3.7% for the week. Meanwhile, June palladium
PAM20,
-0.47%

fell $30.20, or 1.2%, to end $2,439.20 an ounce, with a weekly decline of 2.1%.

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