Forexpros – Gold futures edged higher on Friday, paring a weekly loss as mounting concerns over the outlook for global growth and lingering fears over the sovereign debt crisis in the euro zone boosted the appeal of the precious metal.
On the Comex division of the New York Mercantile Exchange, gold futures for December delivery settled at USD1,625.55 a troy ounce by close of trade on Friday, slumping 1.87% over the week, the fourth consecutive weekly decline.
Gold futures lost nearly 11% in September, the biggest monthly decline since October 2008, but were still up 8% in the third quarter. The precious metal hit an all-time high of USD1,921.05 a troy ounce on September 6.
Gold futures found support after preliminary data on Friday showed that the rate of inflation in the euro zone unexpectedly accelerated to 3% in September, up from 2.5% the previous month. The data dampened expectations that the European Central Bank would lower rates in an attempt to support growth in the single currency bloc.
The data came after a report showing that German retail sales fell 2.9% in August, the biggest drop since May 2007.
Adding to global concerns, a gauge of Chinese manufacturing shrank for the third consecutive month in September, the longest contraction since 2009.
Also Friday, official data showed that consumer spending in the U.S. rose 0.2% in August, slowing from a revised 0.7% in the preceding month, while personal income dipped 0.1%, the first decline since October 2009.
Gold is often seen as an alternative currency in times of global economic uncertainty and as a hedge against rising consumer prices.
However, gains were limited by a broadly stronger U.S. dollar. The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, jumped 1.02% to settle at 79.29 on Friday, just shy of an eight-month high.
Gold futures eased up on Thursday after Germany’s parliament voted to increase the size of the euro zone’s bailout fund, the European Financial Satiability Facility.
The precious metal pared gains after data showed that first-time jobless claims in U.S. fell by 37,000 to 391,000 last week, while a separate report said that the U.S. economy grew by 1.3% in the second quarter, higher than a previous estimate of 1.2%.
Gold futures fell sharply on Monday, trading below USD1,550 an ounce as heavy losses in global equity markets and a margin increase by the CME Group prompted some investors to sell their positions to cover losses in other markets.
Elsewhere on the Comex, silver for December delivery settled at USD29.92 a troy ounce by close of trade on Friday, retreating 2.82% on the week, while copper for December delivery settled just shy of a 14-month low of USD3.108 a pound, dropping 6.27% on the week.
Silver prices lost 28% in September, the largest monthly drop since March 1980, while copper futures sank 24% in September, the worst monthly performance since October 2008.
On the quarter, silver futures were off 14%, while copper tumbled 26%.
In the coming week, markets will be closely watching the outcome of Thursday’s policy-setting meeting by the ECB as well as developments in Greece. Meanwhile, Friday’s data on U.S. non-farm payrolls will also be a major focus for the week.
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