Gold futures declined on Friday to suffer from their largest weekly loss in two months, as investors eyed volatility in global stocks and a leading dollar index aimed for its best weekly performance in more than a year.
April gold GCJ8, +0.47% gave up $3.30, or 0.3%, to settle at $1,315.70 an ounce after tapping a high of $1,325. It finished Thursday in the green, halting a four-session skid as investors bought assets perceived as havens amid an equity rout that saw the Dow Jones Industrial Average DJIA, +1.38% and S&P 500 SPX, +1.49% retreat into correction territory, defined as a drop of at least 10% from a recent peak.
Gold futures logged a weekly decline of about 1.6%, the largest since the week ended Dec. 8, according to FactSet data.
March silver SIH8, +1.34% shed 20.2 cents, or 1.2%, to $16.139 an ounce, for a loss of 3.4% on the week.
"Panic selling has taken over in equities, and gold is up modestly from where it was earlier in the day," said Jeff Wright, chief investment officer at Wolfpack Capital. Gold futures traded as low as $1,313.20 during the session.
Gold appeared unfazed by the passage of the U.S. budget deal after a brief shutdown overnight.
"It is becoming increasingly clear that the yellow metal remains pressured by a stabilizing dollar and rising expectations of higher U.S. interest rates," said Lukman Otunuga, research analyst at FXTM, in a note. "Investors would usually expect gold to benefit from increased stock market volatility, but this has so far not been the case."
U.S. stocks wavered between losses and gains in Friday trading, with the Dow Jones Industrial Average DJIA, +1.38% moving lower as gold prices settled, then rebounding shortly after.
"If speculation continues to increase over developed central banks increasing respective interest rates, gold is at risk to further selling pressure," Otunuga said.
The U.S. dollar edged up Friday, with the ICE U.S. Dollar Index DXY, -0.18% a measure of greenback against a half-dozen rivals, adding 0.2% Friday, set for a 1.4% weekly advance-which would be its strongest weekly rise in more than a year. A stronger buck can undercut appetite for dollar-pegged assets, making them more expensive for those buying with weaker monetary units.
George Milling-Stanley, head of gold investment strategy at State Street Global Advisors, told MarketWatch that some of the early selling in gold this week came as trades were unwound.
"It was really about margin call selling. Investors sold some of their gold holdings to meet some of their margin calls on leveraged equities," Milling-Stanley said. The gold enthusiast believes that gold maintaining a level above $1,300 is a bullish sign.
In exchange-traded products, the exchange-traded, the SPDR Gold Shares GLD, -0.17% traded down 0.1%, while the silver-focused iShares Silver TrustSLV, -0.45% shed 0.8%.
Among other metals, March copper HGH8, +1.04% ended at $3.034 a pound, down 1.6%, with prices down about 4.8% on the week. April platinum PLJ8, +1.14% lost 1.7% to $961.50 an ounce, for a weekly loss of 3.8%, while March palladium PAH8, +1.20% added 0.1% to $963.35 an ounce, down about 7.8% for the week. It settled Thursday at its lowest since October.