Gold prices rallied Friday to a more than one-month high, tacking on nearly 1.8% for the week.
December gold climbed by $18.30, or 1.4%, to settle at $1,296.50 an ounce. Gold futures, which saw their biggest single-session percentage gain since May, scored an almost 1.8% weekly rise, its second in a row. The exchange-traded SPDR Gold Trust was up 1.2%, set for a weekly climb of 1.5%.
Gold’s move Friday “reflects technical factors as we head into a holiday week,” said Rob Haworth, senior investment strategist for U.S. Bank Wealth Management. U.S. financial markets will be closed Thursday for the Thanksgiving Day holiday.
“U.S. dollar softness can explain some of it, and technical levels, including making a new high for the month,” he said. But “I still think [U.S. Federal Reserve] policy is the key factor and will limit gains into year-end.”
Gold gained as the ICE U.S. Dollar Index fell 0.3% to 93.675 in Friday trading. It’s ready for a weekly loss of 0.8%. investors were tracking the likelihood that the Republican tax plan can advance. The focus is now on the Senate after the House passed a sweeping bill to overhaul the tax code on Thursday. A revised bill moving through the Senate Finance Committee differs in key aspects from the House measure, and would delay the corporate-rate tax cut until 2019.
Tax policy and any impact on the economy is one factor under watch as financial markets sketch out the likely course for interest rates over coming months. Economic data remain important to monetary policy forecasts. On Friday, a reading on October U.S. housing starts showed a climb of 13.7% to a seasonally adjusted annual rate of 1.29 million.
Meanwhile, in a speech Thursday, Cleveland Fed President Loretta Mester said a “gradual path” for short-term interest rate increases “still remains the appropriate path of policy.” James Rickards, said that he sees less chance of a December Fed hike. That could mean a fresh ride higher for another asset—gold.
Rising real interest rates impact the opportunity costs of holding gold because the metal provides no yield, giving investors incentive to rotate into riskier assets like stocks. Higher rates may also boost the value of the dollar which usually moves in the opposite direction of the gold price.
In other metals trading, December silver jumped 30.1 cents, or 1.8%, higher to $17.373 an ounce, for a weekly rise of about 3%. The exchange-traded iShares Silver Trust added 1.4%. December palladium rose 0.8% to $992.90 an ounce, after settling earlier this month at $1,015.85—the highest since February 2001. For the week, it ended almost flat. January platinum added 2% to $954.60 an ounce, for a weekly climb of around 2.4%. December copper prices rose 0.3% to $3.057 a pound, with prices down 0.3% on the week.