Metals Stocks: Gold set for daily and weekly gain, stages new attack at breaching $1,300

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Gold futures climbed on Friday, set for a slight weekly gain, in a fresh attempt to clear the psychologically important $1,300-an-ounce level. An overall decline in dollar for the week helped pushed the precious metal higher as stocks also pulled back for the session.

February gold

GCG9, +0.24%

 rose $3, or 0.2%, to $1,290.40 an ounce. The yellow metal was up 0.4% so far this week, according to FactSet data. The SPDR Gold Shares

GLD, +0.25%

 ETF rose 0.3% in Friday trading, up 0.4% for the week.

Buyers are expecting a move to the $1,300 area “soon,” with a pullback in stocks, recent gold purchases by central banks such as China and Russia to shore up their currencies, said George Gero, managing director at RBC Wealth Management. Adding further support to gold, the Federal Reserve is “not rushing to raise rates as traders look ahead to difficulty resolving” the U.S. government shutdown, Brexit problems are increasing and tariffs and trade issues continue, he said.

“While reaching $1,300 in [the] February contract could be news worthy,” Gero pointed out that the April contract

GCJ9, +0.21%

the second most active, trades roughly $6 higher than the February contract. April gold touched a high of $1,302.10 on Friday.

Analysts said movements in the U.S. dollar continued to be among the biggest factor for gold, with the currency in turn taking its cue from expectations around the Federal Reserve’s interest-rate plans. The ICE U.S. Dollar index

DXY, +0.06%

 was up by less than 0.1%, though poised for a weekly loss of 0.6%.

The dollar has weakened this month on expectations the Fed will be less aggressive than previously thought in tightening monetary policy. A weaker dollar can be a positive for commodities priced in the U.S. unit, making them less expensive to buyers using other currencies. Conversely, a stronger dollar can weigh on prices.

Read: Fed chatter confirms interest rates on hold until May at earliest

On Thursday, Fed Chairman Jerome Powell again stressed that the central bank is flexible and patient and can change policy on a dime if the economic outlook worsens. He also said the forecast of two interest-rate increases in 2019 was conditional on a “very strong outlook for 2019.”

With Fed decision-making in mind, the base case for gold in 2019 is for a price range of $1,275-$1,325, according to Maxwell Gold, director of investment strategy at Aberdeen Standard Investments. That assumes just one rate increase in 2019, with moderately rising core inflation and continued job-market strength playing out in the background.

The bullish case, he argued, is gold climbing as high as $1,425 should inflation readings heat up at the same time that the Fed has decided to pause its rate-normalization campaign. On the downside, the strategist added, gold could fall to as low as $1,100 in 2019 if the Fed hikes two to three times over the course of the year, further bolstering the dollar.

Gold held its gain when a report on the consumer-price index early Friday offered little evidence of flaring inflation. In fact, the CPI fell for the first time in nine months, helped by softer gas prices. Broader inflation measures within the report were also subdued.

Watch for greater volatility for the metal over the coming weeks, however, if an analysis of gold investors from MarketWatch contributor Mark Hulbert plays out. Hulbert said gold timers on balance have become overly bullish, an extreme that bodes strongly for a turn in the other direction.

In other metals trading, March silver

SIH9, +0.27%

 rose 4.2 cents, or 0.3%, to fetch $15.685 an ounce. March copper

HGH9, +0.28%

 rose 0.4% at $2.648 a pound, while April platinum

PLJ9, -0.76%

 lost 0.6% to $821 an ounce.

March palladium

PAH9, +0.62%

 rose 0.7% to $1,281.70 an ounce, with prices on track to continue their streak of daily gains to tally a sixth straight record settlement.

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