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Gold futures on Friday were pulling back and threatening to halt a multiday win streak at six sessions. However, futures for the yellow metal were still looking at a weekly gain of over 2.12%, which could eclipse its best weekly gain since the period ended May 7, if values hold, or May 21 if the commodity’s price edges back somewhat, FactSet data show.
At last check, gold for December delivery
GCZ21,
GC00,
was down $8.20, or 0.4%, at $1,855.80 an ounce, following a 0.8% gain that helped to secure the metal’s highest settlement since June 14 and the longest stretch of gains since the six-day climb ended May 20.
Weekly gains for gold have been mostly supported by intensifying concerns about inflation, with gold traditional thought of as a hedge against growing pricing pressures.
“Inflation is front of mind for investors this week after the US CPI report, which has driven a sharp rally in gold and the US dollar,” wrote Neil Wilson, chief market analyst at Markets.com, in a daily note.
The dollar was edging lower but also is looking at a strong weekly gain, up 0.9%, as measured by the ICE U.S. Dollar Index
DXY,
Usually, dollar gains serve as a drag on dollar-priced assets such as gold but the greenback has been drawing some bids due to concerns that surging inflation might force the Federal Reserve into raising interest rates, which could make dollars more attractive to overseas investors.
On Wednesday, gold climbed 1%, finding support on the heels of a 0.9% jump in the U.S.consumer-prices index, which came in well above the 0.6% that economists expected. Annually, inflation climbed to 6.2%, the biggest jump in over 31 years.
Some experts say that gold’s gains may be limited if the dollar climbs in tandem on growing expectations that the Fed will forced to raise interest rates at a more rapid pace than had originally been anticipated.
“Gold is seen as a good hedge against inflation, so the rise in consumer prices would normally be likely to offer support to the precious metal. However, the differential in market expectations, regarding the timings for hiking rates, between the Fed and other major central banks, creates scope for further greenback gains, as the Federal Reserve looks set to start hiking in [2022], while elsewhere the picture isn’t as clear,” wrote Ricardo Evangelista, senior analyst at ActivTrades in a research note.
“This scenario is likely to keep supporting the US dollar and therefore limit the upside for gold,” the ActivTrades analyst wrote.
In other Comex metals, silver for December delivery
SIZ21,
SI00,
was trading 23 cents, or 0.9%, lower at $25.07 an ounce. For the week, silver was up 3.8%, which is gold’s sister metal’s best weekly gain since the week ending Oct. 22.
