Forexpros – Gold futures declined for the first time in six days on Friday, paring a weekly gain as investors cashed out of the market to lock in profits from a rally that took prices to a five-week high.
On the Comex division of the New York Mercantile Exchange, gold futures for December delivery settled at USD1,744.65 a troy ounce by close of trade on Friday, rallying 6.8% over the week, the biggest weekly gain since January 2009.
Gold futures jumped nearly 1.5% on Thursday as the U.S. dollar weakened broadly after European leaders made a breakthrough in resolving the region’s two-year old debt crisis.
Euro zone policy makers reached an agreement with banks to take a 50% writedown on the face value of their Greek debt, as well as enhancing the powers of the region’s bailout fund and recapitalizing European lenders.
The news saw the euro rally nearly 2% against the U.S. dollar to trade at a seven-week high, while the dollar index, which tracks the performance of the greenback against a basket of six other major currencies, tumbled 1.79% to trade at 75.27, the lowest level since September 6.
Dollar weakness usually benefits gold, as it boosts the metal’s appeal as an alternative asset and makes dollar-priced commodities cheaper for holders of other currencies.
Gold prices eased on Friday, pulling back from a five-week high of USD1,752.35 a troy ounce as the U.S. dollar rebounded against most of its major counterparts after suffering its biggest one-day loss in more than two years on Thursday.
However, prices remained supported after ratings agency Fitch said Friday that writedowns on Greek debt would indicate a default and after Italy’s borrowing costs rose to a euro lifetime high, following an auction of government debt.
Investors often buy gold as refuges against economic and political uncertainty.
French lender Societe Generale said Friday that in the near-term, “the market will focus on how central banks across the board are going to shift from neutral or tightening to accommodative or aggressively accommodative policy.”
The lender said in a report that, “Gold should slowly drift higher. If we get some significant policy decisions, like an announcement of QE3, it will give a jolt to the upside.”
Meanwhile, strong physical demand for the precious metal in top consumer India underpinned prices, as Diwali, one of the major gold-buying festivals started earlier in the week.
Elsewhere on the Comex, silver for December delivery settled at a five-week high of USD35.29 a troy ounce by close of trade on Friday, surging 11% on the week, while copper for December delivery settled at a five-week high of USD3.716 a pound, soaring 12.8% over the week.
Copper prices surged as a combination of easing concerns over a ‘hard landing’ in China, optimism over the EU debt deal and an ongoing strike at Freeport McMoran Copper & Gold’s Grasberg mine in Indonesia buoyed prices.
In the week ahead, investors will be focusing on the Federal Reserve’s policy-setting meeting on Wednesday for any hints regarding further easing measures. Friday’s U.S. nonfarm payrolls data will also be in focus.
Forexpros
