Gold prices crawled higher Friday and were about to close the books on back-to-back positive trading weeks ahead of a flurry of economic news that could back or challenge expectations for continued Federal Reserve interest-rate tightening deep into 2018.
the most active contract on Comex, rose $1.80, or 0.1%, to $1,272.20 an ounce. The SPDR Gold Trust
rose 0.1%, while the VanEck Vectors Gold Miners ETF
gained 0.1% premarket.
At 8:30 a.m. Eastern Time, reports on durable goods orders, core capital orders, personal income, consumer spending and core inflation, or the PCE deflator, a favored Fed inflation gauge, for November will be released. New-home sales figures and a consumer sentiment reading for December are due at 10 a.m. Eastern.
Gold futures are headed for a roughly 1.1% weekly gain. Gold has been on the rise since putting in its settlement low of the month on Dec. 12 at $1,241.70. The yellow metal’s futures have climbed more than 10% for the year, a gain largely accumulated in the early months. In fact, data show that prices have been confined to their narrowest trading range of any quarter in a decade in the last three months of 2017. Indeed, gold is still more than 7% off its intraday high for 2017 above $1,360 set in early September.
Gold gained Friday even as the ICE Dollar Index
tipped 0.1% higher at 93.36 and as stocks appeared headed for fresh record highs for the Dow and weekly gains. Gold, which is priced in dollars, is highly sensitive to moves in its exchange rate. They typically move inversely, while stock gains tend to, but don’t always, lure investors away from haven gold. The yield on the 10-year U.S. Treasury note
meanwhile, slipped to 2.482%, a boon to gold’s up-move. Yields had hit their highest in nine months on Wednesday, boosted by expectations the U.S. tax overhaul could accelerate economic growth. Rising bond yields tend to lift the dollar and dull the attraction of nonyielding bullion.
Expectations for tax reform had boosted markets in recent weeks on hopes it will give U.S. companies spending incentive and speed up economic growth. The House of Representatives and the Senate approved, and President Trump will sign, a sweeping tax reform package, cutting the corporate tax rate to 21% from 35%, among other things.
However, Morgan Stanley recently warned that the official passage of the bill could represent a near-term top for the stock market. Tax-fueled stock gains helped drive gold prices to five-month lows earlier in December. Although, some analysts say the risk that this stimulus invites stronger-than-desired inflation could underpin gold’s appeal as a hedge.