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Gold Posts Weekly Loss on Firmer US Dollar, Strong Retail Sales

October 16, 2020 at 19:21 by Andrew Moran

Gold futures settled the session and the trading week lower as a strengthening US dollar and stronger retail sales affected the precious metal. The yellow metal has been seesawing at the $1,900 level, unable to find a concrete direction amid uncertainty in the broader economy and financial market. With the coronavirus lingering in the background and the 2020 US presidential election a couple of weeks away, volatility in the gold market could be normal for the remainder of 2020.

December gold futures slipped $2.10, or 0.11%, to $1,906.80 per ounce at 19:06 GMT on Friday on the COMEX division of the New York Mercantile Exchange. Gold prices will record a 1.5% weekly loss, paring its year-to-date rally to below 26%.

Silver, the sister commodity to gold, is trading higher to close out the trading week, but it will suffer a weekly drop. December silver futures picked up $0.166, or 0.64%, to $24.38 per ounce. The white metal will record a weekly decline of 3.6%, lowering its 2020 gain to around 36%.

Although the greenback weakened on Friday, it is on track for a weekly increase. The US Dollar Index, which measures the greenback against a basket of currencies, tumbled 0.19% to 93.68, from an opening of 93.80. The index will enjoy a five-session jump of roughly 0.7%. YTD, the index is down 2.8%. A stronger buck is bad for commodities priced in dollars because it makes it more expensive for foreign investors to purchase.

On the data front, US retail sales climbed 1.9% in September, up from 0.6% in August. The median estimate was 0.7%. Industrial production contracted 0.6% last month, manufacturing output declined 6%, and capacity utilization dipped to 71.5%. Business inventories rose 0.3% in August.

The metals market has been fluctuating on a diverse array of factors, including expectations over the US stimulus and relief package, the November election, and a resurgence in COVID-19 cases in the US and around the world. Analysts have said that gold prices will likely trade in the range of $1,890 and $1,935, but if they fail to top $1,920 the odds of the precious metal touching $2,000 by year’s end are slim.

Still, the Wall Street consensus is that gold remains on track for a big breakout after hitting a record high this past summer, driven mostly on inflation concerns and economic and political uncertainty.

In other metal commodities, December copper futures shed $0.0215, or 0.7%, to $3.064 per pound. November platinum futures tacked on $5.10, or 0.59%, to $866.40 an ounce. November palladium futures plunged $20.70, or 0.87%, to $2,346.39 per ounce.

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