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Gold prices decline, but tally a rise for the month


Gold futures finished lower on Friday, capping a strong week and month for bullion that recently saw prices touch their highest levels in six weeks.

“Inflation is accelerating while Treasury yields trend lower, resulting in record low negative yields,” which are bullish for gold, Michael Armbruster, managing partner at Altavest, told MarketWatch. “It also helps gold that the dollar has rolled over yet again.”

The dollar traded down 0.8% on the week, as gauged by the ICE U.S. Dollar Index DXY, a measure of the buck against a half-dozen currencies.

Armbruster said that earlier this month, Altavest had “recommended buying the dips in gold below $1,800, as the economic regime has become much more favorable for the yellow metal.”

Gold may even trade back at $2,000 before the end of the year, he said. Prices haven’t settled above that mark since August of last year, the same month when prices climbed to a record high.

Read: Where gold stands a year after hitting a record-high price

December gold
GCZ21,
-1.03%

GC00,
-0.78%
,
the most-active contract, fell $18.60, or 1%, to setle at $1,817.20 an ounce. A 1.7% surge on Thursday marked the highest settlement for the most-active futures contract since June 16 and largest one-day percentage gain since May 6.

For the week, bullion based on the most-active contracts rose nearly 0.9% and scored a 2.6% monthly advance, its third such gain of the past four months, according to Dow Jones Market Data.

Silver futures, meanwhile, ended lower with the September contract
SIU21,
-0.90%

SI00,
-0.90%

down 23 cents, or 0.9%, to $25.55 an ounce, settling 1.2% higher for the week, but suffering monthly loss of 2.5%.

Gold gained on Thursday, buoyed by weaker-than-expected U.S. economic data, even as the Federal Reserve indicated Wednesday that the central bank may taper its bond-buying programs in coming months.

“Gold held onto its post-Fed gains but appears to have met resistance around $1,830…If the dollar’s losses deepen in the coming days and Treasury yields remain subdued, the prospect for a break above this resistance is strong,” wrote Raffi Boyadjian, lead investment analyst at XM, in a daily note.

Also see: Global gold investment down 60% in first half of 2021, says the World Gold Council

Data released Friday revealed that inflation in the U.S. rose sharply again in June, with the so-called PCE price index up 0.5%. Separately, data showed consumer spending rose by 1% last month.

Also Friday, the final reading of University of Michigan’s consumer sentiment index declined to 81.2 in July from 85.5 in June.

Even as COVID headline continue to dominate the news, Armbruster said Altavest is not trading gold based those headlines as COVID infections appear to have peaked and hospitalization and deaths have not seen the same uptick as infections.

Still, Fawad Razaqzada, market analyst at ThinkMarkets told MarketWatch that it’s worth keeping a close eye on the COVID situation. “If the situation gets bad, it could negatively impact growth and, in turn, the Fed’s policy.”

For the week ahead, Razaqzada said the U.S. nonfarm payrolls report next Friday is likely to be the “focal point for gold traders, as it could impact the Fed’s decision on the timeline of tapering” quantitative easing.

Among other metals traded on Comex, September copper
HGU21,
-0.95%

shed 0.9% to $4.48 a pound, with prices up 4.5% for the month.

Read: Copper’s run to record highs may not be over yet

October platinum
PLV21,
-2.03%

lost 1.8% to $1,048.40 an ounce, ending 2.3% lower for the month, while September palladium
PAU21,
+0.79%

finished at $2,656.20 an ounce, up 0.5% on Friday for a monthly loss of 4.4%.



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