Gold futures settled higher Friday as the dollar weakened, with bullion booking its second straight weekly gain, a day after the metal’s largest one-day drop since August.
Gold for April delivery on Comex GCJ9, +0.20% gained $5, or 0.4%, to end at $1,332.80 an ounce, while March silver SIH9, +0.50% picked up 11.3 cents, or 0.7%, to finish at $15.914 an ounce. Gold booked a 0.8% weekly rise, while silver logged a 1.1% weekly advance, based on last Friday’s settlement for the contracts.
On Thursday, gold prices dropped 1.5%, retreating from a 10-month high, with analysts pegging the weakness to less-dovish-than-expected minutes from the Federal Reserve’s January meeting, which were released after Wednesday’s market close.
Analysts said traders viewed the minutes as an opportunity to sell after strong gains for gold in recent trade.
“It appears that financial investors took profits, as evidenced among other things in outflows of 3.7 tons from gold ETFs. This puts outflows in February so far at a good 24 tons. What is more, technical indicators showed that gold was overbought, meaning that a correction appeared necessary,” wrote analysts at Commerzbank, in a note.
Colin Cieszynski, chief market strategist at SIA Wealth Management, told MarketWatch that gold has been retreating at the point where bullion has peaked over the past few years.
“It has encountered some resistance near $1,350 and has pulled back a bit in a normal correction,” he said. However, he said the metal’s underlying uptrend remains intact as the broader commodity complex has benefited from optimism around progress in talks between China and the U.S. in trade. President Donald Trump was expected to meet Friday with China’s top trade negotiator, Vice Premier Liu He.
China is one of the most active purchasers of commodities, including gold. Clashes between Beijing and Washington have been viewed as weighing on the Chinese economy which has showed signs of weakness.
“Gold prices are likely to remain sensitive due to the ongoing trade war negotiations between the U.S. and China,” said Naeem Aslam, chief market analyst at ThinkMarkets FX, in a note.
Weakness in the dollar on Friday also helped to give offer some scope for gains for precious metals priced in the currency. A softer dollar can make assets priced in the monetary unit more attractive to buyers using other currencies. The ICE U.S. Dollar Index DXY, -0.08% a gauge of the buck against a half-dozen currencies, was off 0.2% at 96.44.
“Gold has also continued to rise at a time when its polar opposite, the U.S. dollar, has essentially been flat. This suggests to me that gold has been responding to the recovery in commodity prices (energy, metals, grains, lumber),” Cieszynski wrote.
In other metals trade, March copper HGH9, +1.71% was up sharply, gained 5.45 cents, or about 2%, to close at $2.9515 a pound. For the week, industrial commodity rose 5.4%, which would mark its best weekly rise since a nearly 8% gain in the week ended Sept. 21, 2018.
Read: Will copper’s revival last? China is the X-factor
March palladium PAH9, +1.08% advanced $17.10, or 1.2%, to $1,462.20 an ounce, with a weekly gain of 3.9%, based on last week’s settlement. Meanwhile, April platinum PLJ9, +2.21% advanced $19.60, or 2.4%, to end at $845.90 an ounce, helping the white metal rise 4.8% for the five-day stretch, its best weekly rise since the period ended Nov. 2, 2018.