Gold futures inch higher but head for second weekly loss in a row

A better-than-expected report on U.S. August retail sales on Thursday was partially credited with boosting the dollar and weakening bullion.

“Yesterday’s losses came as a result of the inverted correlation between the precious metal and the US dollar, as the currency received an unexpected boost after the publication of US retail sales that surprised to the upside when the consensus had been for a contraction,” wrote Ricardo Evangelista, senior analyst at ActivTrades, in a daily report.

Retail sales increased 0.7% last month, and economists polled by The Wall Street Journal had forecast a 0.7% drop. That data, along with a batch of others, is raising the prospect that the Fed during its Sept. 21-22 meeting could aim to announce a tapering of its bond buying program that was implemented to provide liquidity to the market during the worst of the COVID disruptions last year.

The dollar was down 0.1%, however, early Friday, eroding its weekly gain to about 0.2%, as measured by the ICE U.S. Dollar Index
DXY,
-0.04%.

Evangelista said that over the longer term, evidence of an economic rebound in the U.S. “aids the case for those arguing for earlier tapering and therefore supports the US dollar, a scenario which could lead to further gold weakness.”

Meanwhile, December silver
SIZ21,
-0.17%

SI00,
-0.17%
was rising 10 cents, or 0.4%, at $22.90 an ounce, following a 4.2% decline on Thursday and logging the lowest finish since November 2020.