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Gold climb steadies, but set to book its best weekly advance in 5 weeks

May 19, 2017

Gold prices traded near break-even levels early Friday, as stocks aimed higher, highlighting a pause on the haven demand that has supported the yellow metal over the past several sessions. The precious metal was on track to post a more than 2% advance in a week marked rising volatility and political unrest in the White House.

June gold GCM7, +0.16% moved between narrow gains and losses, and was last up 40 cents, or less than 0.1%, at $1,253 an ounce. It was headed for a roughly 2% gain for the week.

Gold futures on Thursday halted their longest winning streak since August as a flight-to-safety move waned when stocks and the U.S. dollar stabilized, even as uncertainty continued to surround President Donald Trump. The dollar and stocks diverged early Friday, with a major index tracking the greenback trading in the red.

The U.S. Dollar Index DXY, -0.62% fell 0.6% as its drop this week wiped out the postelection climb.

Read: Market sentiment during Watergate shows how stocks might react to Trump

And: Trump knew Flynn was under investigation before hiring him: report


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A pickup in demand for assets perceived as risky and a stronger dollar tend to be a headwind to gains for precious metals like gold.

Still, gold bulls were sanguine about the metal’s recent uptrend.

Even with stocks trying for back-to-back gains after a plunge earlier in the week, “gold appears to be in demand again as a safe haven at present,” said Carsten Fritsch and the commodities team at Commerzbank, in a note. “It is not only the stock markets and bond yields that have fallen further amid the latest political events in the U.S. The VIX index VIX, -9.35% which serves as a barometer of fluctuations of the S&P 500 index, has surged over the past two days, which reflects the uncertainty among market participants. A good week ago, the VIX index was still at its lowest level since the end of 1993.”

“In addition, the market now only rates the probability of the U.S. Fed raising interest rates at its next meeting in mid-June as being roughly 70%,” Fritsch said. That’s down from nearly 100% odds priced in earlier this month. Higher rates make nonyielding gold less appealing relative to other investments.

Fawad Razaqzada, technical analyst with Forex.com, said market uncertainty leaves gold stuck between so-called key support and resistance levels.

“Specifically, support is being provided by the 50- and 200-day moving averages at around the $1245-1248 area, while resistance…sits at $1265,” he said. “If support at around $1245 breaks decisively, then the next bearish objective would be $1237, which was previously resistance. Thereafter, the bullish trend line would come into focus.”

In other metals, July silver SIN7, +1.02% rose 13 cents, or 0.8%, to $16.79 an ounce and July copper HGN7, +1.32% rose about 2 cents, or 0.8%, to $2.5505 a pound. July platinum PLN7, +0.81% rose $3.30, or 0.4%, to close at $940.10 an ounce and June palladium PAM7, -0.34% declined $3.35, 0.4%, to $762.10 an ounce.

In exchange-traded funds, the SPDR Gold Trust GLD, +0.47% rose 0.2% premarket, while the VanEck Vectors Gold Miners ETF GDX, +1.24% gained 1%. The iShares Silver Trust SLV, +1.53% added 1%.

http://www.marketwatch.com/story/gold-futures-hit-pause-as-stocks-improve-but-weekly-advance-on-track-2017-05-19