Gold stumbled almost 3 percent last week to record its first decline in five weeks, pressured by a strong dollar which depleted investors’ appetite for the precious metal.
The benchmark gold futures contract on New York’s Comex, December, stood at $1,762.90 per ounce, down $8.30, or 0.5 percent. For the week, December gold was down almost $53, or 2.9 percent.
On a similar trend, the spot price of bullion, more closely followed than futures by some traders, stood at $1,747.68 per ounce, down 0.6 percent on the day and 3 percent on the week.
Commenting on gold’s recent decline, Craig Erlam, analyst at online trading platform OANDA, observed that the metal is edging lower again as the dollar continues to see strong support.
“The resurgence in the greenback has weighed heavily on the yellow metal which was already seeing profit-taking after reaching $1,800,” Erlam said.
Prior to its bearish position, gold had enjoyed a four-week positive trend which has seen both gold futures on New York’s COMEX as well as the spot price of bullion gain about $120, or 7 percent from July 21 lows of around $1,680 per ounce.
The yellow metal also peaked at almost $1,825 per ounce on the backdrop of softening inflation and other data which signalled that the Fed might be done with super-sized rate hikes, a notion that pressured the dollar lower.
The start of last week, however, saw the tide turn against gold, as the dollar, considered gold’s contra trade, subsequently grew firmer. At the close of the week, the dollar Index, which pits the U.S. currency against the euro and five other majors, rose significantly, hitting a five-week high of 108.14.
Though there are indications that the grind lower has started for gold, chart signals and views of fundamentals analysts noted that it will not be very much lower.
This, analysts said, is because of the inflation dynamic that’s tied to the stronger U.S. data that has been emerging over the past week.
