Gold prices settled higher Friday, chipping away some of their weekly loss, as comments from President Donald Trump on U.S. interest rates and the dollar, weighed heavily on greenback.
Trump voiced his displeasure with Federal Reserve interest-rate increases[1] in a Thursday interview, prompting a decline in the benchmark dollar index, which gained momentum after he tweeted on Friday, accusing China and the European Union of manipulating their currencies and interest rates:
China, the European Union and others have been manipulating their currencies and interest rates lower, while the U.S. is raising rates while the dollars gets stronger and stronger with each passing day - taking away our big competitive edge. As usual, not a level playing field...
— Donald J. Trump (@realDonaldTrump)
August gold GCQ8, +0.49%[3] rose $7.10, or 0.6%, to settle at $1,231.10 an ounce. The contract settled at $1,224 Thursday—the lowest finish for a most-active contract since July 2017. Thursday’s settlement also marked bullion’s entry into correction territory—down more than 10% from its peak on Jan. 15 at $1,362.90. The futures contract saw roughly 0.8% decline this week, according to FactSet data.
The SPDR Gold Shares exchange-traded fund GLD, +0.59%[4] was up 0.7%, but set for a weekly loss of 0.8%.
“Gold futures did get near-term overextended to the downside this week and President Trump’s comments that stalled the dollar rally are offering some relief to gold…and a retracement back towards the mid $1,200’s is becoming more likely,” said Tyler Richey, co-editor of the Sevens Report.
Trump’s latest tweet come amid a smoldering trade spat that has intermittently rattled financial markets.
The ICE U.S. Dollar index[5] DXY, -0.75%[6] fell by 0.7%, set for a loss of nearly 0.3% for the week. The dollar index, which measures half-dozen rival currencies, typically moves opposite dollar-denominated gold. Overall, the dollar has enjoyed a 2018 rebound as investors have turned to the U.S. as a source of safety [7]during escalating trade spats.
“Now, you would argue that the Fed is independent and President Trump’s musings would have no impact on Fed policy and this is merely a reaction to an oversold condition and the comments spooked the [gold] shorts,” said Peter Hug, global trading director with Kitco Metals. “But it may be the beginning of a bigger policy, whereby the U.S. wants to drive...