Metals Stocks: Gold lower, heads toward weekly loss as dollar holds on to post-Fed advance

Precious metals prices dropped Friday and were headed for a weekly loss, nicked by a firmer dollar that is been bolstered by the Federal Reserve’s adherence to an interest rate-tightening cycle.

Sharp losses for stocks for the session, which are partly tracking the plunge into a bear market for oil, could limit gold’s downside should risk-off sentiment generate refreshed interest in the haven metal.

For now, however, gold continues to decline, “weighed on by returning risk appetite earlier in the week and the dollar over the last 48 hours, with the Fed giving it an extra kick higher,” said Craig Erlam, senior market analyst at Oanda, in a daily update.

“This decline in gold is very gradual though, which suggests to me a certain resilience in gold bulls and if the dollar fails to build on these gains, which I suspect it might, they may feel emboldened going into year-end.”

December gold

GCZ8, -1.33%

lost $14, or 1.1%, to $1,211.10 an ounce, trading down 1.8% for the week. December silver

SIZ8, -2.07%

 dropped 30.3 cents, or 2.1%, to $14.12 an ounce, and has fallen more than 4% for the week.

Gold suffered a fourth loss in five sessions on Thursday, then struggled for direction in electronic trading with the U.S. dollar extending gains once the latest policy update from the Federal Reserve signaled a central bank still on a tightening course for later this year and early next.

“Solid Fed conviction to raise interest rates in December was plain in [Thursday’s] announcement. Higher real interest rates, based on the Fed comments, and a slightly stronger U.S. dollar maintained pressure on gold prices,” said Rob Haworth, senior investment strategist at U.S. Bank.

The ICE U.S. Dollar Index

DXY, +0.33%

a measure of the U.S. currency against six major rivals, was up about 0.1% Friday. The gauge has climbed roughly 5.1% year to date, boosted by a tightening Fed. Higher interest rates can elevate the dollar and dull demand for dollar-denominated commodities, including metals.

“We maintain a cautious view on gold believing trends of higher interest rates, both real and nominal, and a stronger U.S. dollar, are meaningful headwinds into 2019,” Haworth added.

In other metals trade, January platinum

PLF9, -1.60%

 fell 1.4% to $858.20 an ounce, while December palladium

PAZ8, -1.79%

 fell 1.7% to $1,097.10 an ounce. December copper

HGZ8, -1.97%

 declined by 1.6% at $2.693 a pound.

Among exchange-traded funds, SPDR Gold Shares

GLD, -1.27%

 shed 1%.

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