Weak S&P, strong physical demand push gold to weekly gain

Resilient demand for coins and bars and a pullback in the U.S. equities market lifted gold on the day and for the week on Friday. Traders said rising geopolitical tensions in the Middle East also boosted the metal’s safe-haven appeal. Western diplomats said the United States is considering setting up a no-fly zone in Syria, which would represent its first intervention in that civil war, after the White House said Syria had crossed a “red line” by using nerve gas.
The metal rose about 0.3 percent on the week. It has now posted gains in three of the last four weeks following a historic two-day selloff in mid-April. “We’ve seen volume remain strong after it dramatically picked up starting in the middle of April,” said Scott Carter, CEO of precious metals dealer Lear Capital, adding that the sharp price drop prompted investors to add physical gold and silver positions.
Spot gold was up 0.2 percent at $1,388.16 an ounce by 2:27 p.m. EDT (1827 GMT) on Friday.
U.S. Comex gold futures for August delivery settled up $9.80 at $1,387.60. Turnover was very low as trading volume was under 100,000 lots versus its 30-day average of 220,000, preliminary Reuters data showed.
U.S. data on Friday showed consumer sentiment edged off a six-year high in June, while manufacturing output picked up a bit last month after two straight months of declines, suggesting the economy remains on a moderate growth path. Other data on Friday showed wholesale prices jumped in May as gasoline and food prices rebounded.
Markets will watch closely the U.S. Federal Reserve policy meeting on June 18 and 19. Most economists expect the Fed to scale back the size of its bond purchases by yearend, and several expect reduced buying as early as September, a Reuters poll showed. Worries about a possible Fed stimulus withdrawal sent the S&P 500 index down nearly 1 percent this week.
The largest gold-backed exchange-traded fund, SPDR Gold Trust, said its holdings declined by 6.3 tons on Thursday, reversing gains earlier this week.
Silver climbed 1.2 percent to $22.07 an ounce.
HSBC lowered its platinum price forecasts for this year and next, even though supplies are tight, citing the sharp selloff in gold so far this year. Platinum and palladium both posted their biggest weekly falls since the mid-April slide. Analysts cited easing supply worries after South Africa’s Association of Mineworkers and Construction Union (AMCU) delayed plans on Thursday to strike. Spot platinum was down 0.6 percent at $1,442.24 an ounce, notching a 4 percent weekly drop. Palladium inched up 0.1 percent to $730.25 an ounce, ending the week about 3.5 percent lower.

Source: Reuters
Source: Bullion Bulletin

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