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Gold ended higher Friday to recoup some of the recent losses that pulled prices to their lowest level in weeks, but the yellow metal posted a third-weekly loss after failing to find haven-related support despite a stock-market selloff.
“October has been a surprisingly uneventful month for gold in spite of the volatility that hit equity markets,” said Ryan Giannotto, director of research at GraniteShares, which offers the GraniteShares Gold Trust BAR, +0.51%.
“Two countervailing forces on gold were the indefinite postponement of [U.S.] stimulus talks, a negative for gold, countered with the weakening of the dollar through much of the month,” he told MarketWatch.
Gold for December GCZ20, +0.62% GC00, +0.62% delivery climbed $11.90, or 0.6%, to settle at $1,879.90 an ounce on Comex after settling Thursday at $1,868, the lowest most-active contract finish since Sept. 25.
Gold futures, based on the most-active contract, ended 1.3% lower for the week, which marked their third-straight weekly decline. Prices also lost 0.8% for the month, according to Dow Jones Market Data.
December silver SIZ20 SI00 rose 29 cents, or 1.2%, to $23.646 an ounce, with prices down over 4% for the week, but up nearly 0.7% for the month.
Analysts said gold found support Friday as a rebound by the U.S. dollar lost some steam, with the ICE U.S. Dollar Index DXY, +0.10%, a measure of the currency against a basket of six major rivals, was up by just 0.1%. The dollar gauge is on track for a weekly rise of 1.4%, however. A stronger dollar can be a weight on dollar-denominated currencies, making them more expensive to users of other currencies.
“The dollar is firmly back in favor as traders seek out safety at the expense of riskier assets. It still feels strange to put gold in that category but the evidence is there for all to see,” said Craig Erlam, senior market analyst at Oanda, in a note. “The dollar has surged in recent days, although it is seeing some profit-taking today, while gold has tumbled out of the lower end of its range and is testing its late summer lows, around $1,850.”
Gold has failed to find support despite a rise in COVID-19 cases that has seen European countries impose new restrictions on activity and raised worries about the strength of the U.S. and global economic recovery. Stocks have fallen sharply, with the Dow Jones Industrial Average DJIA, -1.02% on track for its biggest weekly fall since March and the S&P 500 SPX, -1.46% headed for its biggest weekly decline since June.
Still, at month end, Giannotto believes that the U.S. presidential election is the “primary catalyst for gold markets, as it will inform the nature and scale of government spending (and consequently borrowing) that will exert downward pressure on the dollar,” he said.
“While a blue wave outcome would likely be most beneficial, a win by either party would remove the political obstacles to further stimulus,” which is bullish for gold, he said. He also said that it’s notable the Federal Reserve has “effectively abdicated its role of stimulating the economy to Congress.”
Following the release of the U.S. consumer sentiment data Friday, gold prices pared some of their earlier gains. The final reading of consumer sentiment index edged up to 81.8 in October, to a new pandemic high, from an initial 81.2, the University of Michigan said Friday.
Among other metals traded on Comex, December copper HGZ20, -0.29% fell 0.3% to $3.0475 a pound, paring its monthly rise to 0.5%.
January platinum PLF21, -0.34% lost 0.1% at $848.40 an ounce, ending 6.7% lower for the month, while December palladium PAZ20, +0.52% added nearly 0.9% to $2,217.20 an ounce, for a monthly loss of 4.9%.
