Metals Stocks: Gold gains Friday, heads for unchanged weekly result but down 1.7% for August

Metals Stocks: Gold gains Friday, heads for unchanged weekly result but down 1.7% for August

Gold gained Friday, trimming its weekly loss to within a whisker of the even mark, though doing little to repair its August retreat.

The metal firmed even as the dollar, gold’s leading influence of late, steadied with a narrow rise, as both markets kept tabs on the latest finger-pointing trade rhetoric out of Washington.

December gold GCZ8, +0.41% was up $7.20, or 0.6%, to $1,212.20 an ounce. The snapback from Thursday’s lowest close in a week, a third straight drop, wasn’t quite enough to erase weekly losses; yet, at this point, gold is headed for a less than 0.1% weekly drop. The metal is poised for an August loss of 1.7%, which would mark a fifth monthly decline in a row.

Gold and the dollar were confined to relatively narrow ranges, and riskier markets sputtered, as financial market participants took in the latest in the continuing trade scuffle between the Trump administration and major trading partners, including China. Trump told aides he is ready to impose tariffs on $200 billion more in Chinese imports as soon as a public comment period on the plan ends next week, Bloomberg reported on Thursday.

“The trade war saga thus appears to have much more room to run,” said Andreas Georgiou, investment analyst with brokerage XM. In addition to the China developments, the U.S. president rejected the EU’s offer for zero tariffs on autos, calling the block “almost as bad as China” on trade. He also threatened to withdraw from the WTO, unless the organization “shapes up.”

The ICE U.S. Dollar index DXY, +0.12% which has enjoyed a summer gain as it drew demand amid global trade uncertainty, was set for a weekly fall of nearly 0.5% and was trading up less than 0.1% Friday. A weaker dollar can make dollar-pegged assets, including gold, more attractive to buyers using other monetary units, and vice versa.

The 10-year Treasury note TMUBMUSD10Y, -0.32% was testing a yield at around 2.84%, set to post a rise for the week, which can create some resistance for the nonyielding precious metal. Despite the trade uncertainty, stock indexes remained close to record levels, on track for strong gains for the week and month.

Looking ahead, September could be a brighter month for gold bulls if history repeats, writes Mark Hulbert. Since it began trading freely in the U.S. in the early 1970s, gold has produced an average gain of 2.1% in September. The comparable monthly average for all non-September months is 0.6%.

Yet the prospect of higher U.S. interest rates next month and again before the end of the year has been a persistent overhang for the gold market. The Federal Reserve next meets on Sept. 25-26 and again in November and December. Markets so far are expecting rate increases in September and December.

Higher U.S. rates raise the opportunity cost of holding gold, which yields no interest and costs money to store and insure. That’s been reflected in overall gold demand; the holdings of SPDR Gold Shares, the world’s largest gold-backed ETF at 24.36 million ounces, are down 13% since late April, fund data shows.

And in Friday trading, the SPDR Gold Shares GLD, -0.49%  was off 0.2%, while the VanEck Vectors Gold Miners ETF GDX, -1.58%  was down 1.6%.

Rounding out metals action, December silver SIZ8, +0.28%  rose 5 cents, or 0.4%, to $14.650 an ounce. Traders were here looking at a weekly decline of 1.7% and has shed over 6% for August. The silver-focused iShares Silver Trust SLV, -1.23% shed 1.2%.

December copper HGZ8, -0.90%  traded at $2.694 a pound, down 0.8%. October platinum PLV8, +0.35%  rose 0.4% to $794.90 an ounce, but December PAZ8, +0.32%  palladium rose 0.2% to $962.70 an ounce.

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