Gold Cheers Weaker Dollar, But Eyes Sixth Month of Losses

By Ambar Warrick 

Investing.com-- Gold prices rose slightly on Friday as pressure from the dollar eased further, but were set for a sixth straight month of losses as rising interest rates severely dampened the outlook for the yellow metal. 

Bullion prices were set to lose nearly 3% in September, following a series of hawkish moves and commentary by the U.S. Federal Reserve. A spike in the dollar, which jumped to 20-year highs earlier this month, also pressured gold.

But weakness in the dollar this week helped gold stage a small recovery from two-year lows. The greenback fell 0.7% on Thursday, and was set to lose 1.3% this week, amid a swathe of profit taking. 

Spot gold prices rose 0.1% to $1,662.86 an ounce, while gold futures were up 0.2% at $1,671.20 an ounce by 19:30 ET (23:30 GMT). Gold prices were also set to add 1.2% this week. 

Still, the yellow metal remained under pressure from elevated U.S. Treasury yields, with the 10-year rate remaining close to a 12-year high. Rising yields have dented gold’s appeal this year by increasing the opportunity cost of holding the non-yielding metal. 

The Fed’s commitment to keep hiking rates, which was reiterated by several officials this week, is expected to keep gold muted for the remainder of the year. But the yellow metal may regain some of its safe-haven sheen, particularly as economic conditions worsen across the globe. 

In industrial metals, copper prices also benefited slightly from weakness in the dollar, and were set for their first weekly gain in three. 

Copper futures rose 0.2% to $3.4335 a pound, and were up 2.6% this week. 

But the red metal was set to lose about 2.4% in September, as weakening economic growth across the globe severely dented the outlook for copper demand.

Focus in the market is now on Chinese manufacturing activity data, due later today. Factory activity in the world’s largest copper importer is expected to have weakened for a third consecutive month.