Gold futures declined on Friday, poised for a second straight weekly loss, as investors eyed volatility in the global stock markets and a leading dollar index aimed for its best weekly performance since October
April gold GCJ8, -0.02% gave up $3.10, or 0.2%, to $1,315.90 an ounce after tapping a high of $1,325. It finished Thursday in the green, halting a four-session skid as investors bought assets perceived as havens amid an equity rout that saw the Dow Jones Industrial Average DJIA, -0.65% and S&P 500 SPX, -0.45% retreat into correction territory, defined as a drop of at least 10% from a recent peak.
Gold futures were on track for a weekly decline of about 1.6%, according to FactSet data.
March silver SIH8, -0.71% shed 15.6 cents, or 1%, to $16.185 an ounce, set for a loss of 3.1% on the week.
Jeff Wright, chief investment officer at Wolfpack Capital, said he’s watching “both the U.S. dollar and U.S. equity markets for clues as to direction of gold” into next week.
Some gains in the U.S. equity markets are “taking attention away from gold—not that there was much safe haven interest this week,” he said. But “if equities pull in over the day... gold will recover, especially if attention turns to the budget deal adding approximately $1 trillion per year.”
The declines for precious metals has partly been driven by a gain for the U.S. dollar, with the ICE U.S. Dollar Index DXY, +0.20% a measure of greenback against a half-dozen rivals, rising 0.2% Friday and set for a 1.3% weekly advance—its strongest weekly rise since late October. A stronger buck can undercut appetite for dollar-pegged assets, making them more expensive for those buying with weaker monetary units.
So-called flight-to-quality purchases that kicked in on Thursday signals that fears on Wall Street about the recent downdraft were intensifying, with haven assets like gold and the Japanese yen USDJPY, -0.29% starting benefit from haven flows as the stock selloff accelerated. U.S. stocks wavered between losses and gains in Friday trading.
George Milling-Stanley, head of gold investment strategy at State Street Global Advisors, told MarketWatch that some of the early selling in gold came as trades were unwound.
“It was really about margin call selling. Investors sold some of their gold holdings to meet some of their margin calls on leveraged equities,” Milling-Stanley said. The gold enthusiast believes that gold maintaining a level above $1,300 is a bullish sign.
Among other metals, March copper HGH8, -1.31% traded at $3.042 a pound, down 1.3%, with prices down about 4.6% on the week. April platinum PLJ8, -1.06% lost 1.1% to $968.10 an ounce, ready for a weekly loss of more than 3%, while March palladium PAH8, -0.22% shed 0.6% to $956.40 an ounce, trading at its lowest levels since October and down about 8.5% for the week.