Gold futures early Friday traded near their lowest level of 2018 as a cocktail of resistance put the commodity in position for a substantial weekly loss.
Gold for August delivery on GCQ8, -0.62% fell $7.40, or 0.6%, to $1,218.20 an ounce, leaving it near the lowest for a most-active contract since July of 2017. December gold GCZ8, -0.62% fell $8.60, or 0.7%, to $1,226.90 an ounce. September silver SIU8, -0.81% meanwhile, fell 13 cents, or 0.8%, to $15.365 an ounce.
For the week, gold looked set to fall 1%, while silver was on pace to log a weekly decline of 1.2%. A popular fund that tracks gold’s moves, the SPDR Gold Shares GLD, -0.78% is down 0.7% for the week, while a comparable silver fund, iShares Silver Trust SLV, -1.29% also was set to decline by about 0.7%, as of Thursday’s close.
A strengthening dollar has been often cited as the main culprit for longstanding weakness in dollar-pegged assets like gold. A stronger buck can make buying commodities priced in the currency more expensive to purchasers using other currencies. A measure of greenback’s strength, the ICE U.S. Dollar DXY, +0.07% has gained 0.4% so far this week, with gold moving inversely to the dollar.
Gold has been in a decided downturn, with some questioning its ability to hold up as a traditional haven asset amid concerns about trade clashes between the U.S. and its partners across the globe.
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A Federal Reserve that has been normalizing monetary policy at a steady clip has been a key bearish factor. The central bank has been lifting benchmark interest rates which can also dent gold’s allure because bullion doesn’t offer a yield. Benchmark 10-year Treasury rates TMUBMUSD10Y, +0.03% have been climbing, flirting with 3%, and up more than half-a-percentage point since the start of the year. The Fed is expected lift interest rates twice more in 2018—a factor that could further pressure gold’s perceived value.
Looking ahead, markets will be closely watching coming GDP data, which could help influence assets, including the Dow Jones Industrial Average DJIA, +0.44% and the S&P 500 index SPX, -0.30% bonds and gold, broadly. Economists polled by MarketWatch expect annual gross domestic product in the second quarter of 4.2%, which could be one of the fastest rates of economic expansion since a 5.2% print in 2014. The data will be released at 8:30 a.m. Eastern Time, followed by July consumer sentiment at 10 a.m.
Read: Wall Street investors can’t remember the last time a GDP report was so crucial
“Perceived safe-haven gold is once again losing out because of investors’ insatiable appetite for risk with the major U.S. stock indices hovering near all-time highs, and as the dollar has rebounded ahead of the U.S. GDP release later on—market participants clearly expecting to see a positive surprise,” Fawad Razaqzada, market analyst at Forex.com, told MarketWatch.
Razaqzada cautioned, however, that gold could be jolted higher if the GDP reading surprises, though he said any rise might be muted by the overarching bearish fundamentals surrounding bullion.
“But in the event GDP is weaker, then the dollar could slump and this could help to lift gold. Even so, the metal’s near-term technical bias would only turn positive in the event it breaks key resistance in the $1245/48 range,” he said.
In other metals, September palladium PAU8, -1.05% lost $10.90, or 1.2%, to $922.70 an ounce, while October platinum PLV8, -1.11% was sliding by about $10.40, or about 1.2%, at $825.50 an ounce. September copper HGU8, -0.28% meanwhile, gave up about a penny, or 0.3%, to $2.809 a pound.
For the week, palladium is set for a gain of 3.8%, platinum is on track for a decline of 0.6%, while industrial metal copper is poised for a weekly climb of about 1.9%.
