Gold futures pop higher, poised for strongest weekly gain since May

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Gold futures headed higher on Friday, with bullion on track for the sharpest weekly gain since May, as investors turned to precious metals amid growing concerns that rising inflation in the aftermath of COVID-19 may erode purchasing power.

Gold and silver are “supported by increasing worries about problematic price inflation and by a lower U.S. dollar index to end the trading week,” said Jim Wyckoff, senior analyst at Kitco.com, in a daily note. Gold is often perceived as a hedge against rising inflation.

The markets for both gold and silver have “finally awakened to the fact global inflation is rising and probably won’t be just transitory,” said Wyckoff. “Gold prices have been trending higher since late-September and silver prices this week hit a six-week high.”

“History shows hard assets like the precious metals become more in favor as an inflation hedge when consumer and producer prices are rising,” he said.

December gold GCZ21, +0.27%   GC00, +0.27% rose $27.50, or 1.6%, to trade at $1,809.40 an ounce, following a 0.2% slip on Thursday. For the week, however, gold is up over 2% and looks to notch a fourth weekly gain in five weeks. If bullion’s weekly gain holds, it will mark the sharpest weekly rise for a most-active contract since the period ended May 7, FactSet data shows.

December silver SIZ21, +0.60% SI00, +0.60% was trading 62.5 cents, or 2.6%, higher at $24.795 an ounce, following a 1.1% drop on Thursday. For the week, silver is up over 6%, which would also represent its best weekly gain since the weekly stretch ended May 7.

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Investors are watching for comments from Federal Reserve Chairman Jerome Powell later Friday, which will be the final comments from the central banker this month before a November policy meeting which is expected to mark the start of tapering of monthly purchases of Treasurys and mortgage-backed securities.

The expected reduction in asset purchases, which has been supportive of healthy financial conditions, have been driving yields higher, weighing on bullion buying.

Gold’s value has been somewhat rangebound since July as a result of concerns about global growth and inflation, which are bullish for the yellow metal, and rising yields, which can undercut the appeal of non-yielding precious metals.

On Friday, Treasury yields moved lower, with 10-year Treasury note yields TMUBMUSD10Y, 1.636% at 1.66%, down from 1.674% on Thursday and the ICE U.S. Dollar index DXY, -0.08% fell by 0.2%.

Those moves followed data Friday from IHS Markit that showed a survey of senior business executives in service-oriented companies rebounded to a three-month high of 58.2 this month from 54.9 in September.

Among other Comex-traded metals. December copper HGZ21, -1.85% edged down by 0.8% to $4.52 a pound, eying a weekly loss of around 4.5%.

January platinum PLF22, -0.11% tacked on 2.6% to $1,076.70 an ounce , with prices trading 1.6% higher for the week, while December palladium added less than 0.1% to $2,019 an ounce, poised for a weekly loss of 2.8%.

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