Gold futures push toward biggest weekly losses in almost five years

Commentary by the top banker in the U.S. pulled down gold futures this week as the yellowish metal dropped to its lowest price in about three years, according to Bloomberg.

Bullion slightly climbed on Friday, though its losses of 6.4 percent on Thursday were daunting. Those losses came in the aftermath of U.S. Federal Reserve Chairman Ben Bernanke stating on Wednesday that the body he leads is aiming to taper economy-spurring monetary stimulus measures in the coming weeks and close them by the end of the year.

Bernanke spoke during the customary news conference that follows policy maker meetings. The Federal Open Market Committee adjourned two days of meetings on Wednesday.

"There's always physical demand that might come in a bit stronger, considering the move we had," commodity strategist Marc Ground with Standard Bank Plc in Johannesburg told the news service on Friday. "I don't think we'll get back to where we were anytime soon. The gold market is getting used to the idea that liquidity won't be as forthcoming anymore."

At 11:52 a.m. on Friday, gold futures rose 0.65 percent, an $8.39 lift to $1,293.36 per troy ounce.

Long faces
Gold bugs are none too pleased these days. Through Thursday the precious metal had lost about 23 percent of its value, dragging it toward its biggest yearly losses in 32 years.

As investors' interest is fading in gold as a storage haven, bullion also is in peril of breaking its 12-year streak of annual gains.

But all is not lost as the slump represents a key opportunity for a certain group to take action.

Bargain-hunters benefit
The Wall Street Journal reports Friday's gains were due to increased demand for gold by bargain hunters.

While at its lowest value in more than two years, people looking for a good deal were in luck.

Kitco Metals, a dealer of precious metals, noted surges of more than 900 percent from Wednesday to Thursday for transaction volume.

"Physical demand was again aggressive yesterday, and overnight, in Europe as many investors continue to see the long-term benefits of maintaining gold as a portion of their portfolios," global trading director Peter Hug with Kitco Metals told The Wall Street Journal on Friday.

Following that economic data, the yellowish metal surpassed the $1,300 per troy ounce threshold.

Steadying markets
Reuters reports additional factors that benefited the precious metal during the Friday trade session were global shares, bonds and commodities encountering a modicum of normalcy and steadiness after a rough day on Thursday.

But gold futures have lots of ground to make up during the past week. Since last Friday, the precious metal has lost 7 percent of its value, noting the biggest weekly loss since it fell from its all-time high in September 2011.

The record price for gold futures is $1,923.70 per troy ounce, as established on September 7, 2011.

Continued gains unlikely, one analysts says
Though bullion achieved gains as high as 1.3 percent on Friday, that upward tick is unlikely to continue, analyst Andrey Kryuchenkov with VTB Capital told the news source on Friday.

"Bullion will seek to consolidate near current lows, but there is little chance for a sustained rebound," the analyst told the news source on Friday. "We had little evidence of physical buying – spooked market participants will stay away."

He also pointed to the strengthening U.S. dollar as being a key reason as to why bullion is unlikely to climb anytime soon.

"Inflation is subdued, seasonal Asian demand is yet to pick up, the greenback is stronger, the opportunity cost of holding gold will start gaining soon," he told Reuters on Friday. "Given the macro recovery, equities will still perform better – bullion is not trading as a safe haven asset. Why hold it at all?"