Oct 13, 2017 | MarketWatch
Gold futures pushed above the key $1,300 level Friday, tacking on more than 2% for the week, after a reading on U.S. inflation came in cooler than expected, raising uncertainty about the pace of U.S. interest-rate hikes by the Federal Reserve.
December gold GCZ7, -0.36% climbed by $8.10, or 0.6%, to settle at $1,304.60 an ounce, tallying a gain of 2.3% for the week. The exchange-traded SPDR Gold Shares GLD, +0.19% added 0.6% in Friday trading, poised for a weekly gain of around 2.1%.
“There are many triggers for gold, including the mix of economic data showing uncertainty of future growth to inflation, which would push the [Federal Reserve] to raise rates in a slower sequence,” said Peter Spina, president and chief executive officer of GoldSeek.com. “The market is questioning the future rate increase amounts and thus the stage is being set up for a much larger gold rally in the months to year ahead.”
Treasury yields TMUBMUSD10Y, +1.14% and the dollar index were trading lower for the week, sending gold in the opposite direction.
A report Friday showed consumer inflation rose largely because hurricanes drove up gas-pump prices. Without food and energy included, core CPI rose a much smaller 0.1%. The recent energy-driven rise in CPI pushed the yearly rate of inflation to 2.2% from 1.9% to match a six-month high. The more closely followed core rate, however, was unchanged at 1.7% for the fifth month in a row and still below the Federal Reserve’s 2% target.
Also reported, retail sales surged 1.6% in September, reflecting the largest increase in 2 1/2 years.
–– ADVERTISEMENT ––
Most analysts said the weather-impacted report wasn’t likely to change the near-term course of interest-rate policy but leaves open questions about Fed aggressiveness into 2018. Fed meeting minutes released this week suggested that Chairwoman Janet Yellen and other policy makers will increase interest rates once more in December but that efforts to normalize policy will otherwise run at a gradual pace.
However, better-than-expected data on U.S. consumer sentiment, which rose to a 13-year high in October, prompted gold to briefly trade off the session’s highs.
The ICE U.S. Dollar Index DXY, +0.14% was on course to fall 0.7% for the week, the first weekly decline in five weeks as traders sized up Fed move prospects. A softer buck can make commodities priced in the currency, including gold, more appealing to buyers using weaker monetary units.
Read: Currency traders have already worn out there 2017 trading themes
Closely-followed investor Dennis Gartman told the CNBC Futures Now program on Thursday that “one currency that will probably do best of all is gold. Gold has been rallying in dollar terms. It has been a bull market since December. And it is still a bull market.”
Elsewhere, silver for December delivery SIZ7, -0.51% rose 14.5 cents, or 0.8%, to $17.411 an ounce—up 3.7% for the week. The silver-focused ETF, the iShares Silver Trust SLV, -0.98% rose 0.5%.
In other Comex trading, December copper HGZ7, +0.03% rose 0.4% to $3.134 a pound, ending about 3.5% higher on the week. January platinum PLF8, -0.76% added 0.7% to $947.90 an ounce, for a weekly rise of 3.4%, while December palladium PAZ7, -0.62% rose 1.2%, at $985.50 an ounce, for a weekly climb of 7.2%—its best such gain since January.
