Weekly Round-Up: Gold Dips, Heads for Five-week Low

The gold price found itself trading down on Friday (April 27) on the back of a strengthened US dollar. Gold is headed towards a five-week low, tumbling 1 percent during the five-day period.

As of 8:54 a.m. EST on Friday, the yellow metal sat at US$1,319.10 per ounce — down US$23 from this time last week. Prices were under pressure due to a stronger dollar, higher US Treasury yields and easing geopolitical concerns.

“The precious metal has come under pressure lately … back into the lower end of 2018’s familiar range as the Greenback gets driven up the charts by increasing US Treasury yields, the USD staging a comeback across the broader FX markets,” said Joshua Gibson at FX Street.

Despite the decline, market watchers are bracing for a rebound, with Todd Horwitz at Kitco stating, “although the recent pattern in gold has become ugly, there should be a dead-cat bounce in the metal in the next couple of days. Gold has been in a consolidation pattern for months and once again the metal is coming down to the bottom end, which suggests a bounce.”

“Even if gold headed lower, which is expected, a healthy bounce to US$1,330 to US$1,340 is in the cards. Gold has become very oversold the last four to five days … the bounce should come from between US$1,310 to US$1,315 and should be a fast, vicious rally that will come out of nowhere,” he added.

Much like gold, silver was no match for the strengthened greenback, taking a hit throughout the week and trading down on Friday to reach a three-week low. The white metal decreased 0.33 percent to sit at US$16.47 an ounce as of 9:30 a.m. EST on Friday.

Despite silver’s current situation, analysts are still predicting a “big break” for the precious metal.

“Silver has been trapped in that channel, between $16 an ounce to $17 an ounce, we’ve been there for three months. Something is going to cause it to break out to the upside, it’s just a question of what it is,” said Phil Streible, senior market analyst at RJO Futures.

“We saw ETF inflows really come in strong into silver, and I think that it’s just winding up,” he added.

Rounding out the week in metals is copper, which was down 1.15 percent, trading at US$3.07 per pound as of 9:46 p.m. EST.

Meanwhile, oil also experienced a slight dip in the market Friday morning. The energy resource dropped under the pressure of a higher dollar, but Brent still was headed for its third week of gains amid supply concerns over the potential of the US reimposing sanctions on Iran.

“Recent comments from French President Emmanuel Macron indicate his belief that President [Donald] Trump will move to pull the US out of the Iranian nuclear deal, despite Macron’s efforts to secure continued partnership from the US,” said Robbie Fraser, commodities analyst at Schneider Electric.

“That move would risk some of the oil supply gains that Iran has seen following the removal of sanctions more than two years ago, and is a fundamentally bullish factor for oil futures,” he added.

US President Donald Trump will decide by May 12 whether to reimpose sanctions on Iran that were lifted as part of an agreement with six other world powers over Tehran’s nuclear program.

As of 10:03 a.m. EST, oil was sitting at $67.83 per barrel.

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Securities Disclosure: I, Nicole Rashotte, hold no direct investment interest in any company mentioned in this article.