Gold set for its biggest monthly loss in 5 months And summer doldrums are coming Published: Feb 27, 2015 10:32 a.m
SAN FRANCISCO (MarketWatch) — Gold futures edged higher on Friday, but were still set to post their biggest monthly loss since September.
Traders continued to monitor the direction of the dollar, mulled the timing of a Federal Reserve rate hike and digested the latest spate of U.S. economic data in their quest to gauge the metal’s appeal.
Gold for April delivery GCJ5, +0.38% tacked on $4, or 0.3%, to $1,214.10 an ounce on Comex. Based on the most-active contracts, prices traded about 5.1% lower for the month. The monthly loss would come on the heels of January’s 8% rally, which was the largest monthly gain in 3 years. For the week, prices were up 0.8%.
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May silver SIK5, -0.11% traded at $16.585 an ounce, down 4 cents, or 0.2%. It was down around 3.7% for the month but up roughly 1.9% for the week.
Risks tied to a rate hike by the Federal Reserve “scared gold traders ... and if they really did throw a bid into rates in Q2, it wouldn’t be out of the question to see gold hit new lows in the next couple months,” said Adam Koss, president of Libertas Weath Management Group.
On Thursday, John Williams, president of the San Francisco Fed, said the central bank can’t wait until inflation is back above 2% before starting to raise short-term interest rates, speaking in an interview on Fox Business Network.
Also see: Fed’s Mester wants rate hike to be ‘viable option’ by June meeting
Strength in the dollar DXY, -0.14% has also been a drag for dollar-denominated gold prices of late, with the ICE U.S. dollar index climbing to its highest level since 2003 on Thursday. “The greenback’s run since July has been spectacular and unprecedented, but unsustainable at this rate of growth,” said Koos.
For the week, gold prices got a boost from the return of Chinese traders this week following the Lunar New Year celebrations.
Economic news didn’t appear to have much of an impact on gold trading Friday. The February reading of Chicago PMI tumbled to a 5½ year low, while the University of Michigan’s consumer sentiment saw an upward bump to its final reading for February. Gross domestic product expanded by a 2.2% annual clip in the final three months of 2014.