Gold futures finished with a gain on Friday, stretching their winning streak into a seventh consecutive session, with prices scoring the biggest weekly percentage gain since May.
“Inflation is a very real fear, and the price of gold is reflecting this,” said Adam Koos, president at Libertas Wealth Management Group.
The rising U.S. dollar is creating a near-term drag on gold, Koos told MarketWatch. However, “as more stimulus and liquidity comes out of the [Federal Reserve] and Washington, we could see this short-term uptrend quickly change course at any time, sending the dollar falling, which would create a catalyst for gold prices.”
On Friday, gold for December delivery
rose $4.60, or nearly 0.3%, to settle at $1,868.50 an ounce. That was the highest settlement for a most-active contract since June 11 and marked seven consecutive session gains, the longest such stretch the longest stretch since a nine-day rise ending July 29, 2020, according to Dow Jones Market Data.
Prices for the yellow metal also found support after the University of Michigan’s reading on U.S. consumer sentiment Friday showed a fall to 66.8 this month from 71.7 in October, while expectations for 1-year inflation rose to 4.9%, it’s highest level since the summer of 2008, from 4.8% in October.
Futures for the yellow metal notched a weekly gain of nearly 2.9%, for the best weekly gain since the period ended May 7.
Silver for December delivery
climbed 5 cents, or 0.2%, to settle at $25.346 an ounce. For the week, silver gained 4.9%.
Read: Why surging U.S. inflation has gold bulls look for record highs
Earlier this week, gold, silver, and platinum “all staged big breakout rallies, as their role as a store of value and a hedge against rising inflation came to the forefront, after both the U.S. and China reported inflation pressures increasing even more than expected,” Colin Cieszynski, chief market strategist at SIA Wealth Management, told MarketWatch.
Investors are “more concerned that higher inflation is not transitory after all and appears to be here to stay for a while, with commodity prices climbing, wages increasing and supply chain disruptions causing shortages,” said Cieszynski. Gold is traditionally thought of as a hedge against growing pricing pressures.
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.
Against this backdrop, the dollar moved a bit lower Friday, but was looking at a strong weekly gain, up 0.8%, as measured by the ICE U.S. Dollar Index
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 Fed into raising interest rates, which could make dollars more attractive to overseas investors.
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 , 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 U.S. dollar and therefore limit the upside for gold,” the ActivTrades analyst wrote.
In other Comex trading, December copper
tacked on 1.1% to about $4.45 a pound, for a weekly gain of nearly 2.5%.
lost 0.5% to $1,089.20 an ounce, ending 5.2% higher for the week. December palladium
rose 2.7% to $2,117.70 an ounce, logging a 4.4% climb for the week.