Gold ends session higher, posts biggest weekly loss since February

Price action

• Gold futures for June delivery 
  GC00,
  -0.09%

  GCM23,
  -0.09%
  gained $21.80, or 1.1%, to settle at $1,981.60 per ounce on Comex, with prices for the most-active contract down 1.9% for the week. That was the biggest weekly percentage loss since the week ended Feb. 3, according to Dow Jones Market Data.

• Silver futures for July delivery
  SI00,
  -0.17%

  SIN23,
  -0.17%
  rose by 43 cents, or 1.8%, to $24.06 per ounce, for a weekly loss of 0.4%.

• June palladium
  PAM23,
  -0.87%
  gained $73.60, or 5.1%, to $1,523.80 per ounce, with prices tacking on 0.7% for the week, while platinum for July delivery
  PLN23,
  -0.37%
  rose by $17.50, or nearly 1.7%, to $1,075.70 per ounce, for a weekly gain of 0.8%.

• Copper for July delivery
  HGN23,
  -0.11%
  advanced by 4 cents, or almost 1.2%, to $3.73 per pound, ending about 0.1% higher for the week.

Market drivers

“Sellers wasted no time at all jumping into action and pricing in fast declines into gold after it unexpectedly dropped below $2,000 this week,” Jameel Ahmad, chief analyst at CompareBroker.io, in market commentary.

The U.S. dollar has strengthened for the week, along with higher Treasury yields, taking the shine off gold in recent days, but a pullback in the greenback on Friday gave gold a chance to recoup some losses.

The ICE U.S. Dollar Index
DXY,
-0.38%,
a gauge of the greenback’s strength against major currencies, was off 0.5% at 103.04 in Friday dealings, though still poised for a weekly gain of 0.4%.

Read: Gold’s drop under $2,000 is a buying opportunity, say UBS and other analysts

Short sellers came back once gold traded below $2,000, said Chintan Karnani, director of research at Insignia Consultants, told MarketWatch. A selloff in gold “accelerated this week once the U.S. dollar Index broke past [its] 50-day moving average and 100-day moving average, he said, with the technical breakout in the dollar leading to a “technical breakdown in gold.”

Prices for the metal continued to move higher Friday following remarks from Federal Reserve Chair Jerome Powell. He said that his colleagues think it will take time to bring inflation back to the Fed’s 2% target. He also said the level of interest rates is now high enough to be “restrictive” or slowing growth, but confirmed that the central bank has not already decided what to do in June.

Whether gold continues to decline in the short term depends on the trend of the U.S. dollar index, the metal’s inability or ability to trade over its 100-day moving average around $1,927, U.S. nonfarm payrolls numbers on June 2, and physical and investment demand for gold, said Karnani.