Gold ends week below $1,900/ounce as Dollar gains on ‘transitory’ inflation view

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Gold ends week below $1,900/ounce as Dollar gains on ‘transitory’ inflation view

The precious yellow metal spot gold futures’ prices had plummeted more than 1 per cent on Friday, as the American currency had regained some of its footings lost over recent weeks amid growing investors’ bet that a latest rise in inflation indicators such as US CPI (Consumer Prices Index) would be momentary.

In point of fact, in the day’s sharp downturn in spot gold futures’ prices were almost entirely catalysed by a stronger US Dollar alongside a robust uptick in US Consumer Prices Index last month as beforementioned, as followed by a closer look into the US CPI that was mostly riding on the back of an upsurge in materials’ prices and a labour market restrain, market participants around the globe who had been clinging on to gold futures as a hedge against a higher inflation, left their buying positions behind and turned to the greenback, eventually restoring a safe-haven appeal of US Dollar.

US Dollar gains as Gold ends week below $1,900

Citing statistics, on Friday’s commodity market round off, spot gold futures’ prices faltered as much as 1.2 per cent to $1,875.31 an ounce, while US gold futures prices ended 0.9 per cent lower to $1,879.60 an ounce.

In tandem, the US Dollar Index (DXY) measured against a basket of six major currencies on an average added 0.6 per cent, dampening gold futures’ safe-haven bid. On the week, spot gold futures’ prices had shrugged off 0.70 per cent, while the US Dollar Index added 0.42 per cent.

Among other precious metals, palladium edged 0.2 per cent higher to $2,783.10 per ounce and platinum contracts fell 0.3 per cent to $1,147.08 an ounce, while silver futures remained mostly flatlined, wrapping up the week at $27.96 an ounce.

Meanwhile, adding that there might be a near-term retracement in spot gold futures’ prices to $1,850 an ounce, however, the yellow metal would likely to be backed by a dovish US Fed stance in a longer run, a TD Securities commodity strategist Daniel Ghali said, “…As a result (of strong CPI) a pullback in gold should unfold”.