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Gold prices made modest moves on Friday, taking a pause from a recent series of gains that have lifted prices to around a six-week high, but the precious metal was on pace for its third consecutive weekly advance.
A weak U.S. dollar, which appears set to produce two straight months of declines greater than 2%, contributed to a rise in dollar-denominated gold futures on Thursday to an intraday high of more than $1,900 an ounce for the first time since early November.
Read: How a weaker dollar could help fuel a commodities boom in 2021
“Economic data continues to show moderating growth into the end of the year, which is upping expectations for a new stimulus aid package to be passed by Congress,” analysts at Sevens Report Research, wrote in Friday’s newsletter. “That, in turn, saw market inflation expectations…rise to a fresh two-plus-year high just shy of 2%.”
Pairing the rising inflation outlook with a very dovish [Federal Reserve] meeting this week offers a very favorable outlook for gold,” they said.
Read: Fed will keep buying bonds until there is ‘substantial progress’ in inflation, labor market goals
Still, gold futures on Thursday “fell short of breaking out through a downtrend line dating back to the all-time highs, which is currently hovering right near $1,900” an ounce, the analysts said. “Looking ahead, that will be the next necessary step in declaring the bull market in gold ‘back on’.”
February gold GCG21, -0.10% fell by $1.10, or nearly 0.1%, to $1,889.30 an ounce, following a 1.7% gain on Thursday that pushed the metal to its highest finish since Nov. 6, according to FactSet data.
Read: Gold eyes a more than 20% gain for the year, with more to come in 2021
The Federal Open Market Committee offered its last policy update of 2020 on Wednesday, when it emphasized its intention to keep interest rates pinned near 0% to at least 2023 and to keep buying bonds until the economy fully recovers from the viral pandemic.
Traders have focused on “marginal easing as [Fed Chairman Jerome] Powell committed to continuing currency purchases for longer, in keeping with previous comments on interest rates,” wrote Craig Erlam, senior market analyst at Oanda, in a research note Friday. The Fed “seems committed, in theory, to keep rates lower for longer than it would in the past and that applies to purchases as well. That could continue to support the yellow metal, especially given the direction of travel for the dollar.”
Meanwhile, silver for March delivery SIH21, -0.54% shed 17 cents, or 0.7%, to trade at $26.01 an ounce, following 4.5% surge a day earlier.
For the week, gold is on track for a gain of 2.3% following two consecutive weekly climbs, while silver futures were looking at a rise of around 7.9%. Silver was set to mark its best weekly climb in six weeks if gains hold, according to FactSet data, based on the most-active contract.
Against that backdrop, congressional leaders in the U.S. are racing to hammer out a $900 billion coronavirus relief aid package to out-of-work Americans and businesses troubled by the COVID-19 pandemic. Lawmakers are scrambling to achieve a fiscal spending deal before federal funding lapses and the government faces a shutdown at 12:01 a.m. Saturday.
Rounding out action on Comex Friday, March copper HGH21, +0.58% tacked on 0.5% to $3.618 a pound, with prices trading around 2.6% higher for the week.
Read: Iron ore leads gains for industrial metals,, up nearly 65% this year
January platinum PLF21, -0.64% shed 0.5% to $1,044.90 an ounce, poised for a 2.3% rise on the week, while March palladium PAH21, -0.19% traded at $2,339.50 an ounce, down 0.3% for the session, but trading 0.3% higher for the week.
