Gold prices on Friday marked their first settlement above $1,900 an oz. since April, finding support from a weekly decline within the U.S. dollar within the wake of information showing a slowdown in U.S. inflation.
Prices for the most-active gold contract also reached a so-called “golden cross” on Friday. That happens when a short-term moving price average crosses above a long-term moving average, potentially indicating a change in sentiment toward the metal.
Price motion
-
Gold futures for February delivery
GC00,
+1.29% GCG23,
+1.29%
climbed $22.90, or 1.2%, to settle at $1,921.70 an oz.. Prices for a most-active contract ended 2.8% higher for the week and hadn’t settled above $1,900 since late April, in line with Dow Jones Market Data. -
March silver
SI00,
+1.73% SIH23,
+1.73%
tacked on 37 cents, or 1.5%, to $24.372 per ounce, for a weekly rise of 1.6%. -
Palladium for March
PAH23,
-0.02%
shed $3.60, or 0.2%, to $1,787.30 an oz., losing 1.1% for the week, while platinum
PLJ23,
-0.86%
fell $11.80, or 1.1%, to $1,072.50 per ounce, posting a weekly decline of two.9%. -
March copper
HG00,
+0.48% HGH23,
+0.48%
climbed by 2 cents, or 0.5%, to settle at $4.216 per pound, marking one other finish at its highest since June. For the week, copper futures ended 7.8% higher.
Market drivers
“Gold has easily cleared the $1,900 level, and hitting these big numbers helps attract investors to a trend,” Brien Lundin, editor of Gold Newsletter, told MarketWatch.
Most-active gold futures posted a golden cross on Friday, Dow Jones Market Data show, with the 50-day moving average rising to $1,789.94, topping the 200-day moving average of $1,786.74. The last golden cross was seen on Feb. 11, 2022.
A golden cross for gold “should attract more buying from technically-oriented traders,” said Lundin.
Gold futures prolonged their gains from Thursday, when signs of cooling U.S. inflation with the December consumer-price index weighed on the dollar and helped to drive the yellow metal even higher.
The ICE U.S. Dollar Index
DXY,
a measure of the greenback’s strength against a basket of rivals, fell nearly 1% on Thursday in response to the CPI data. In Friday dealings, it was down nearly 0.1% to 102.192.
The dollar downtrend has been helping gold, and that seems “more likely to proceed,” Lundin said.
Thursday’s CPI data “confirmed that inflation is now on a downward trajectory, albeit still considerably higher than the Fed’s goal of two%,” said Rupert Rowling, market analyst at Kinesis Money, in market commentary. “As such, while the U.S. central bank continues to be more likely to increase its benchmark rates when the committee meets at the tip of this month, the expectation now’s that the hike will only be 25 basis points.”
Meanwhile, data released Friday showed a survey of U.S. consumer sentiment rose to 64.6 in January, a nine-month high, reflecting easing worries about inflation.
Lundin identified that fundamentally, “one can consider that there are two basic paths ahead for monetary policy: the Fed pauses and maybe pivots, after having successfully driven inflation near its goal level, or the Fed does so without having gotten inflation all the way down to near its 2% goal.”
“Either end result could be bullish for gold, however the latter could be much more so since it could not be bullish for equities or bonds” — and would attract much greater allocations from diversified portfolios, he said.
So, “from each fundamental and technical standpoints, it looks like this gold rally has some legs to it,” said Lundin. “It’s a bit overbought immediately, so a pause next week wouldn’t surprise, but neither should we discount the momentum the metal is now demonstrating.”
““From each fundamental and technical standpoints, it looks like this gold rally has some legs to it. It’s a bit overbought immediately, so a pause next week wouldn’t surprise, but neither should we discount the momentum the metal is now demonstrating.” ”
Gold has been in rally mode since early November, but its latest leg higher this 12 months has grabbed the market’s attention as investors ponder whether the valuable metal might return to its highs north of $2,000 per ounce seen in March of last 12 months.