Gold posted its first weekly drop in more than two months after being buffeted by climbing real yields, profit-taking and uncertainty over US-China trade talks.
Bullion is ending a week filled with big price fluctuations on a relatively tame note, trading at more than US$100 an ounce below last week’s record after dropping the most in seven years on Tuesday.
Gold and silver spot prices posted their first weekly declines since June 5.
Photo: Reuters
The rally in gold, which has surged this year as central banks worldwide took steps to shore up ailing economies and real yields turned negative in the US, is encountering some turbulence with the sell-off in US Treasuries and a stalemate in US stimulus talks.
China’s economic recovery continued last month and US industrial production increased for a third straight month, further dimming the appeal of bullion as a haven, data showed on Friday.
“The washout we saw earlier this week was sort of taking the froth out of the speculation” in gold, Matthew Weller, global head of market research at Gain Capital Group LLC, said by telephone.
Spot gold fell 0.4 percent to US$1,945.12 an ounce in New York, closing with a 4.4 percent weekly loss, the first decline since June and the largest since March.
Futures for December delivery retreated 1 percent to settle at US$1,949.80 on the Comex.
Silver for immediate delivery declined 3.8 percent to US$26.4463 an ounce, after a 7.8 percent jump on Thursday.
Even with the decline, gold is still up 28 percent this year.
Credit Suisse raised its gold price forecast for next year to US$2,500, seeing a “perfect storm” of factors pushing bullion to a new high.
On Friday, a report showed that US consumer sentiment remained weak this month, amid expectations of a bumpy ride ahead for an economy coping with an unfettered COVID-19 pandemic and widespread joblessness. A meeting expected between China and the US to discuss progress on the first phase of their trade deal was also postponed indefinitely.
“Barring further profit-taking, we think the longer-term uptrend is intact given US dollar weakness and the scale of stimulus and as we expect interest rates to remain low or negative,” Suki Cooper, precious metals analyst at Standard Chartered Bank, said in a note. “Price dips are likely to be viewed as buying opportunities as the macro backdrop remains favorable for gold.”
“All the conditions for a favorable gold price environment are present,” said Jake Klein, executive chairman of Australian producer Evolution Mining Ltd. “The geopolitical tensions, the COVID pandemic and the impact that’s having — unemployment rates are rising — these are all unfortunate circumstances. Unfortunately, gold is a beneficiary of those times.”
Weller said that he is watching stimulus deliberations in the US.
“[The US] Congress will act when the market forces them to. So if we see stocks come off a bit, that could increase the pressure, and once people start getting evicted and once the unemployment payments drop off severely, I think that’s what could cause Congress to act, and therefore put some wind in the bulls sails when it comes to gold,” Weller said.
From India to China to the US, automakers cannot make vehicles — not that no one wants any, but because a more than US$450 billion industry for semiconductors got blindsided. How did both sides end up here? Over the past two weeks, automakers across the world have bemoaned the shortage of chips. Germany’s Audi, owned by Volkswagen AG, would delay making some of its high-end vehicles because of what chief executive officer Markus Duesmann called a “massive” shortfall in an interview with the Financial Times. The firm has furloughed more than 10,000 workers and reined in production. That is a further blow
MOBILE SMART: The Dimensity 1200 is 22 percent better in terms of performance than its predecessor, and 25 percent more power-efficient, the handset chip designer said MediaTek Inc (聯發科) yesterday unveiled its premium 5G processors — the Dimensity 1200 and Dimensity 1100 — as it vies for a larger slice of the world’s rapidly growing 5G smartphone market. Manufactured using Taiwan Semiconductor Manufacturing Co’s (台積電) 6-nanometer process technology, the Dimensity 1200 processor performs 22 percent better than the previous generation Dimensity 1000+ processor, and is 25 percent more power-efficient, MediaTek said. Chinese smartphone brands Xiaomi Corp (小米) and Realme Mobile Telecommunications (Shenzhen) Co (銳爾覓移動通信) are to be the first adopters of the latest Dimensity chips, the companies said during a virtual media briefing. Xiaomi plans to equip its first
‘BROAD RANGE’: The US Department of Commerce intends to deny a significant number of license requests for exports to Huawei, an industry association said US President Donald Trump’s administration notified Huawei Technologies Co (華為) suppliers, including chipmaker Intel Corp, that it is revoking certain licenses to sell to the Chinese company and intends to reject dozens of other applications to supply the telecommunications firm, people familiar with the matter told reporters. The action — likely the last against Huawei under Trump — is the latest in a long-running effort to weaken the world’s largest telecommunications equipment maker, which Washington sees as a national security threat. The notices came amid a flurry of US efforts against China in the final days of Trump’s administration. US president-elect Joe
Answering to a reported request by Germany to help address a chip shortage in its auto industry, the Ministry of Economic Affairs (MOEA) yesterday said that it was in talks with domestic chip suppliers. Foreign media over the weekend reported that German Minister of Economic Affairs Peter Altmaier had sent a request to Taipei to ask Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) to cooperate more closely with German automakers to provide microchips and sensors, to bridge a shortage that has emerged over the past few months. The MOEA said that it had not yet received the request and could therefore not elaborate