Gold futures on Friday registered losses on the day – and on the week.
MarketWatch reports Friday's downward drive of the yellowish metal is attributable to the emboldened U.S. dollar as the world's reserve currency and the precious metal typically perform the inverse of one-another.
Another factor playing into losses for gold includes investors unloading bullion, which typically serves as an asset haven during trying economic times when investors are in need of a hedge. Gold is a traditional protector of wealth when financial, monetary and economic systems fall under threat and peril, or cause additional consternation upon consumers.
"We have weakness in risky assets across the board," head strategist Matt Zeman with Kingsview Financial in Chicago told MarketWatch, also pointing to oil futures and U.S. equities while calling attention to U.S. Federal Reserve chair Ben Bernanke suggesting on Wednesday on Capitol Hill that a third round of asset purchasing is unlikely anytime soon. "We also continue to see the unwinding of the [third round of quantitative easing] trade, a lot of people had positioned for it."
Losses to the yellowish metal for the week were driving toward 3.7 percent, which comes to a fall of roughly $70.
At 3:08 p.m. on Friday, gold futures dropped 0.63 percent, a $10.90 loss to $1,711.30 per troy ounce.
Commentary from Bernanke before the U.S. Congress on Wednesday prompted the yellowish metal to lose 4.3 percent of its value.
Reuters reports this week's performance of the precious metal is its worst since December of last year. During the final month of the year, gold futures lost 10 percent of their value but still managed to complete an 11th consecutive year of annual gains.
Investors were prone to return to the gold market after Wednesday's losses, amid efforts to capitalize on reduced prices for the precious metal following the sell-off prompted by the Bernanke testimony.
"The broader macro backdrop remains gold-favourable, given the negative interest rate environment, longer-term inflationary concerns and lingering sovereign debt uncertainties," states a research note penned by Barclays Capital.
Had a third round of quantitative easing been more probable, the dollar would have lost value while the yellowish metal would have attracted attention and investment.
The gold sell-off that began Wednesday was prompted by investors' reduced need for an asset haven.
"Metals continue to languish in the aftermath of the Wednesday selloff," states a TD Securities traders' note cited by The Wall Street Journal.
Continued demand from China and India, the globe's respective top and second-biggest consumer of the precious metal, has helped sustain high prices of gold when it sharply fell during the past 12 months.
"At these price levels we've seen an interest in the physical market pick up, particularly from Asian buyers," analyst Marc Ground with Standard Bank told the news source.
With a record price of $1,923.70 per troy ounce established early this past September as the sovereign debt crisis attacked euro zone nations' banks and markets, the yellowish metal is believed by many to be fully capable of surpassing the psychological milestone price of $2,000 per troy ounce, perhaps as soon as this year.
One analyst told The Wall Street Journal that gold will achieve that threshold during the second half of the year.
"The monetary and physical supply [and] demand fundamentals point to a very hefty upside in the second half of the year," analyst Bart Melek with TD Securities told the news source. "We continue to see gold at over $2,000/oz late in the year."
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