Gold extends rise, as yellow metal’s monster rally persists

Gold futures rose on Friday, adding to a push toward fresh six-year highs, amid a backdrop of lower interest rates and monetary-policy easing that bulls deem ideal for the metal to rally.

August gold trading GCQ19, +0.63% was gaining $10.70, or 0.8%, to $1,438.80 an ounce, after hitting $1,448 an ounce in electronic trade Thursday at 4 p.m. Eastern time. Thursday’s settlement was the loftiest for a most-active contract since May 13, 2013, marking a fresh 52-week high for the commodity, according to Dow Jones Market Data.

The commodity was on track for a weekly gain of 1.8% based on its July 12 close, which would represent its sharpest advance since the week ended June 21, FactSet data show.

Comments from New York Fed President John Williams, which have since been moderated by a Fed spokesman, were interpreted as endorsing an aggressive interest-rate cut at the Federal Reserve’s policy meeting later this month and sent bond yields and the dollar lower. Both of those market conditions are seen as supportive for gold gains.

On Friday, the U.S. dollar DXY, +0.36% was gaining 0.2% at 97 on Friday, while the 10-year Treasury note TMUBMUSD10Y, +1.40% was yielding 2.04%.

“Markets took this as a signal that the Fed will act with force in July and deliver easing that is over and above what is expected, sending the implied probability for a 50 [basis point] cut soaring. Accordingly, the dollar fell with US bond yields, as stocks and gold roared higher. Yet, in what seemed like an exercise in damage control, the New York Fed quickly came out to clarify that Williams’ speech was not a signal about July, but an ‘academic’ view instead,” wrote Marios Hadjikyriacos, investment analyst at brokerage in a Friday note.

Still, expectations for a decisive cut to rates was still seen as a strong possibility by markets.

Commodity experts and investors also have pointed to some $13 trillion dollars in sovereign debt that have negative yields, meaning lenders parking money receive less than their original investment, have helped to burnish gold’s appeal as a haven.

Meanwhile, increasing tension in the Middle East have added to the bullish theme for precious metals. On Thursday, news of the U.S. Navy shooting down an Iranian drone always added fuel to gold’s price moves; however, Iran has since denied that its drone was shot down.

Analysts at currency brokerage firm FxPro says that bids for gold have been raised to around $1,450 but the metal has met some resistance at this level in recent trade.

Gold’s sister metal, silver, was up 18 cents, or 1.1%, at $16.38 an ounce after finishing at its highest since June 29, 2018 in the prior session. The metal is on track for a weekly gain of 7.5% based on last week’s settlement, which would represent the biggest weekly gain since a 10.1% weekly surge at the period ended July 1, 2016.

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