Gold Has First Weekly Win in Six; Still Trapped in Low $1,700s

  • Commodities News
Gold Has First Weekly Win in Six; Still Trapped in Low $1,700s

By Barani Krishnan -- Gold bulls clinched their first weekly win since early June as the yellow metal’s losing streak came to an end after five weeks in the red.

With an ounce remaining in the low $1,700 range, analysts said gold could be vulnerable to another dip into $1,600 territory next week as markets brace for the Federal Reserve’s July rate hike.

However, if bullion holds to the patterns of the past two days, it could also bounce forcefully from any descent into the sub-$1,700 zone, that could catapult it towards $1,800, said analysts.

“Gold is starting to act like a safe-haven as weakening economic growth will force many central banks to abandon their aggressive tightening plans,” said Ed Moya, who heads U.S. research at online trading platform OANDA. “Gold might find resistance at the $1750 level, but if it doesn't, not much will get in the way until the $1,800 level.”

Benchmark gold futures for August delivery on New York’s Comex settled up $14, or 0.8%, at $1,727.40 an ounce, after a plumbing near a 16-month low of $1,680.96 on Thursday.

For the week, August gold rose 1.4%, after a previous five-week tumble that cost bulls a total of $172 or 9%.

The weekly gain came as the Dollar Index , which pits the greenback against six major currencies, hit a more than two-week low of 105.98 on Friday. The dollar, a contrarian trade to gold, soared to 109.14 last week for its highest levels since December 2002.

The greenback has dropped since the start of this week and its decline accelerated after the European Central Bank on Thursday joined many other central banks in raising interest rates , in a focus on fighting runaway inflation rather than preventing an economic downturn.

Friday’s drop in the dollar came as weaker-than-expected U.S. services sector data weighed on sentiment in the currency. S&P Global said the reading on its latest services sector fell to 47 versus a forecast of 52.6 and a prior print of 52.7.

The poor service data intensified bets that the Fed will not impose a rate hike of 100 basis points for July, after initial bets for such a record increase.’s Fed Rate Monitor Tool assigned a 78% probability instead for a 75 basis point hike for July and a final range of 3.25-3.50% by end-December. Previously, expectations for year-end rates were as high as 4%. Rate cuts are also increasingly being priced in for 2023.

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