Stronger dollar pushes gold toward biggest weekly fall since May

NEW YORK/LONDON — Gold prices hovered above a fourmonth low on Friday and were on track for their biggest weekly fall since May after progress on US tax reform fueled optimism about the US economy and boosted the dollar.

Stronger- than- expected US employment data on Friday also demonstrated healthy economic growth and suggested the Federal Reserve will raise interest rates in its meeting this week, as expected.

Spot gold was up 0.10% at $1,247.81 an ounce by 2:34 p.m. EST ( 1934 GMT), near Thursday’s low of $1,243.71, the weakest since July 26. It has fallen 2.60% so far this week, its third consecutive weekly fall and the biggest since early May. US gold futures settled down 0.40% at $1,248.40.

“Gold’s luster was tarnished this week, not only by its failure to react at all positively to ( US President Donald) Trump’s contentious Jerusalem announcement but also by its unseemly retreat through the bottom of a five month range,” Tai Wong, head of base and precious metals trading at BMO Capital Markets in New York, said on Friday last week.

“Bullion stabilized somewhat today, helped by weak earnings in the US employment report with bulls now pinning their hopes on a dovish hike by the Federal Reserve” this week.

The US Fed is expected this week to announce a rise in interest rates and offer guidance on the pace of further increases. It has previously forecast three rate hikes in 2018.

That is likely to pressure gold prices because rising interest rates push up bond yields, reducing the appeal of non-yielding gold, and tend to boost the dollar.

Wall Street and other major global stock markets rose, and the US dollar was on pace for its fifth day of gains after the jobs data.

Selling of gold was triggered last week after it broke below $ 1,260, the bottom of its trading range since September, and plunged below its 200-day moving average for the first time since July. “You can put it down to the strength of the dollar and the ebullience of investors regarding equities and all things risk-on,” said ETF Securities analyst Martin Arnold.

Platinum was down 0.80% at $895 an ounce after falling to the lowest since February 2016 at $ 878.50. It was and on track to fall 5.50% last week, its biggest weekly loss in 13 months. Silver was up 0.50% at $15.81 but down nearly four percent last week. Palladium was 0.60% lower at $1,007 an ounce. —