Gold futures dropped below the key $1,300 mark on Friday to settle at their lowest in a month and half, down over 2% from a week ago—the sharpest weekly fall since August.
An overall risk-on sentiment, which boosted U.S. and global stocks, as well as strength in the U.S. dollar worked to dull demand for the precious metal.
The precious metal only managed to briefly pare some of its earlier losses, as the dollar’s weakness in the immediate wake of cooler-than-expected U.S. ISM manufacturing and consumer-sentiment readings proved to be short-lived.
April gold GCJ9, -1.86% fell $16.90, or 1.3%, to settle at $1,299.20 an ounce. It marked the lowest most-active contract settlement since Jan. 25, according to FactSet data. For the week, bullion was down about 2.5%, which was the steepest weekly percentage decline for a most-active contract since the week ended Aug. 17.
Read: Why gold fell in February, but is still on a long-term track to reach $2,000 an ounce
On Friday, data showed the final reading of the University of Michigan consumer sentiment index faded in February, with a 93.8 reading, below the MarketWatch-compiled economist consensus of 95.6. American manufacturing grew their businesses in February at the slowest pace since the election of President Donald Trump in November 2016, with the ISM manufacturing survey falling to 54.2 in February from 56.6.
The weaker-than-expected data prompted the dollar, as measured by the ICE U.S. Dollar DXY, +0.30% to give up its earlier gains, but it then moved higher, looking to erase nearly all of its weekly loss. The index was up 0.3% at 96.468 as gold futures settled. Strength in the greenback can pressure prices for gold, which are traded in the dollar.
Returns for the metal were weak overall. “Gold’s recent performance indicates that markets are pricing in the increased likelihood of a U.S.-China trade deal happening sooner rather than later,” said Lukman Otunuga, research analyst at FXTM. Also, “investors are hopeful that the much-feared no-deal Brexit will be avoided, ultimately supporting risk appetite.”
“However, the end result for either of these major risks remains uncertain at this point in time,” said Otunuga, in a daily note. “Concrete and positive resolutions may result in a surge in demand for riskier assets and conversely be negative for gold. It should also be kept in mind that gold bulls remain inspired by geopolitical risk factors and speculation over the [Federal Reserve] taking a break on monetary tightening this year.”
Read: Fed’s Bostic sticks to forecast of one interest-rate hike this year
For now, upward momentum in assets perceived as risky, like stocks, have drawn some demand away from precious metals, which are viewed as havens. The Dow Jones Industrial Average DJIA, +0.43% and the S&P 500 index SPX, +0.69% traded higher on the first day of the month.
Gold lost about 0.7% in February, based on the most-active contract, following four consecutive months of gains. Gold-backed exchange-traded fund SPDR Gold Shares GLD, -1.69% was down by 1.1% for the session, set to end the week 2.3% lower.
May silver SIK9, -2.97% settled at $15.256 an ounce, down 2.4% for the session, with prices losing around 4.1% for the week. May copper HGK9, -0.78% ended at $2.932 a pound, down 0.5% for the session, and down 0.7% from the week-ago finish of $2.952 for the most-active contract.
April platinum PLJ9, -1.76% shed 1.3% to $863.70 an ounce, but held on to a weekly rise of 2.1%, while June palladium PAM9, +0.02% added 0.3% to end at $1,506.10 an ounce—up 3% for the week.