Gold futures fell Friday but secured a weekly advance, their third in a row, as a leading dollar index softened and stocks put in a mixed session.
Investors kept tabs on budget tensions in Europe, which could have consequences for broader market sentiment.
December gold GCZ8, -0.04% fell $1, or 0.1%, to $1,229.10 an ounce after spending time in positive and negative territory. The ICE U.S. Dollar Index DXY, -0.33% slipped 0.3% at 95.68 but has strengthened 0.6% so far in October and is up roughly 4% year to date in the wake of interest-rate hikes at the Federal Reserve, another of which is expected before the year is out.
“The attempt by gold to lastingly exceed the 100-day moving average looks promising,” said Carsten Fritsch, commodities analyst with Commerzbank, in a note. “If it succeeds, technical follow-up buying should push the gold price further up. At the same time, gold is resisting the firm U.S. dollar.”
As Italy continues to spar with officials in the wider regional bloc, the spread between German and Italian bond yields—a measure of concerns in Europe and among market participants worried about contagion—stands at 3.375 percentage points. That is the widest in about five years.
Haven gold “is finding support from increased risk aversion among market participants, as reflected in falling stock markets [U.S. markets were mixed Friday as gold closed], and from additional ETF inflows,” Fritsch said. “The conflict between Italy and the EU over the Italian draft budget for 2019 is escalating. The question is already being raised of how sustainable Italian debts are, especially if yields continue to climb.”
Gold futures are headed for a 0.6% weekly gain, according to FactSet data, while the metal has advanced 2.8% so far in October; it is down roughly 7% for 2018 to date.
“Technically, gold bulls have the near-term technical advantage. This week’s pause is not bearish,” said Jim Wyckoff, senior analyst with Kitco.com. He said bulls are watching for a futures close above “solid resistance” at $1,250 to confirm their viewpoint. For bears, the next near-term downside price breakout objective is below solid technical support at $1,200.
Meanwhile, December silver SIZ8, +0.25% was up 4 cents, or 0.3%, at $14.65 an ounce, attempting to snap what had been a string of three weaker sessions. The contract did salvage a 0.3% weekly gain.