Gold scores first weekly gain in a month

June-14 Gold futures fell modestly on Friday, but scored their first weekly gain in about a month as investors looked to U.S. economic data for clues on the timing of the Federal Reserve’s interest-rate hike, ahead of the central bank’s meeting next week.

Gold for August delivery on Comex GCQ5, +0.01%fell $1.20, or 0.1%, to settle at $1,179.20 an ounce, with prices up about 1% for the week following declines over the past three weeks.

July silver SIN5, -0.22% lost 13.5 cents, or 0.9%, to $15.825 an ounce — 1% lower for the week.

The Labor Department Friday said producer prices rose a seasonally adjusted 0.5% in May, driven by a sharp rise in the cost of gasoline and other fuels. The rise, the largest since the fall of 2012, was in line with forecasts. A gauge of consumer sentiment jumped in June after hitting a six-month low in May.

Strong May retail sales data released Thursday and upward revisions to data from previous months and last week’s stronger-than-expected jump in nonfarm payrolls released a week ago showed the U.S. economy is recovering from a weak first quarter, analysts said.

So market expectations have shifted back to prospects for a near-term interest-rate hike following the upbeat U.S. economic data. Tighter monetary policy is a negative for gold because it implies rates will move higher and gold doesn’t bear interest.

The Fed will conclude a two-day meeting on Wednesday with a statement on monetary policy. “If the Fed shows their hawkish approach, it could explode the dollar [to the upside] and that may be negative…for the gold price,” said Naeem Aslam, chief market analyst at AvaTrade.

It really depends how aggressive of an approach it takes, he said. If the central bank shows it is “really aching” to raise the interest rate very rapidly, “it could actually have a positive impact as traders may feel concerned about the Fed approach.”

Analysts also see potential support for gold in the near term as Greece’s debt drama continues to play out.

Analysts at Capital Economics said they expect the growing likelihood of a Greek default to provide further support for gold. Given that, they said their year-end 2015 forecast for the metal remains at $1,400 per ounce.

Meanwhile, on a technical basis, the market is still waiting for a “relief trigger,” where a breakout or breakdown of “some important levels could spark traders’ interest in gold again” $1,170 on the downside and $1,210 to the upside, said analysts at Secular Investor.

In other metals trade, July platinum PLN5, -0.91%fell $8.40, or 0.8%, to $1,096.80 an ounce, around 0.4% higher for the week, while September palladium PAU5, -0.81% lost $4.70, or 0.6%, to $738.15 an ounce, down about 1.7% for the week.

July copper HGN5, +0.26%rose a cent to $2.678 a pound for a weekly loss of 0.5%.

Source: Marketwatch