SAN FRANCISCO (MarketWatch) — Gold futures finished lower for the week Friday, as recent comments by the top U.S. central banker squashed hopes of immediate stimulus, lifting the dollar and sinking prices a day earlier.
Gold, however, ended Friday’s session on a positive note, with traders unwilling to short the metal ahead of a weekend of potential gold market-moving developments.
“Given the ongoing uncertainty in Europe, and the recent rate cuts by some central banks, many traders don’t want to go into the weekend betting against gold,” said Brien Lundin, editor of Gold Newsletter. “There is the very real potential of some gold-bullish development over the weekend, and therefore the risk of being caught on the wrong side of the trade with the markets closed.”
Gold for August delivery tacked on $3.40, or 0.2%, to settle at $1,591.40 an ounce on the Comex division of the New York Mercantile Exchange, rebounding after touching a low of $1,556.40. Prices ended 1.9% lower for the week.
“While there is short-term disappointment in a less dovish Fed than fast money traders ... would like, nothing has occurred to diminish the fact that there will be additional quantitative easing or monetary accommodation for the European Central Bank and Fed down the line,” said Tom Essaye, editor of the 7:00’s Report, a daily commentary on equity and commodity markets and the economy.
“Given that fact, this needs to be viewed as a buying opportunity in gold,” he said.
Fed chief testifies on U.S. economy
Federal Reserve Chairman Ben Bernanke’s testimony to Congress left markets disappointed Thursday.
Gold prices had slumped 2.8% on Thursday, as traders reacted after Federal Reserve Chairman Ben Bernanke in testimony to Congress failed to signal that more monetary easing measures were on the way.
The Fed’s willing to act should the European debt crisis worsen, Bernanke said, but he offered no hint of what the Fed might do at its next policy meeting. The Federal Open Market Committee is scheduled to meet June 19 and 20. Read more on Bernanke.
“Gold is always a speculation on monetary policy, but the last week’s action shows leveraged traders treating it like live in-running sports gambling,” said Adrian Ash, head of research at BullionVault.
“Up on nonfarm [payrolls data], back down on Bernanke — gold continues to lack direction versus the dollar near-term, but the clear trend for euro-zone buyers is higher,” he said in emailed comments. “And just like early last summer, that’s where the imminent crisis is.”
On Friday, in comments to reporters in the White House, Obama took on a more strident tone toward Europe, urging the region’s leaders to aid the troubled banking sector and warning that Greece shouldn’t leave the euro zone. Read more on Obama.
“All Obama did today was urge action in Europe and list a couple of quick-fixes,” said Ash. “If he’d urged the same to Washington, it might mean something.”
Metals traders also digested the latest news on the economic front.
U.S. data covering the month of April showed that the nation’s trade deficit shrank as exports retreated for the first time since November, while wholesale inventories gained 0.6% on the month to a seasonally adjusted $483.5 billion. Read about the U.S. trade gap.