Strengthening global equities helped pull down gold futures on Friday as the yellowish metal's demand as a safe haven slipped, according to Bloomberg.
Losses on the final trading session of the week reverse two consecutive days of gains, when bullion surged nearly 4 percent. Conjecture about the U.S. Federal Reserve delaying reduction to its economy spurring monetary stimulus measures weakened the U.S. dollar, which emboldens the yellowish metal since the two typically perform the inverse of one another.
"People want to be in equities as the most lucrative investment," president Michael Smith with T&K Futures & Options in Port St. Lucie, Florida told Bloomberg on Friday. "Also, there is some profit-taking after the big rally."
But the precious metal remained north of the milestone price of $1,300 per troy ounce.
At 10:04 a.m. on Friday, gold futures dropped 0.27 percent, a $3.59 loss to $1,316.73 per troy ounce.
Annual streak in peril
Thus far this year, gold is down more than 20 percent, which does not bode well for its annual year streak. Unless bullion reverses course and gains during the next two-plus months, that annual-gain run will halt at 12 years.
Despite the poor performance during the Friday trading session, Reuters reports gold futures are barreling toward their biggest weekly gains in about eight weeks.
Anticipation is running high that the partial government shutdown is a key factor that will play directly into the U.S. central bank's preference to push up implementation of tapering economy-spurring monetary stimulus measures.
This past week, political leaders in the U.S. arrived at an agreement regarding two issues that were riling markets throughout the world. They ended the partial government shutdown and they were able to boost the debt ceiling in advance of a looming deadline.
But some say the solution to the debt ceiling debacle merely is a palliative because it pushes up the issue to a later date.
Investors and analysts said efforts are underway to determine the extent of damage during the three-week partial government shutdown. They already are reconciling themselves to understanding that the Fed's tapering of asset purchases is likely to delay tapering well beyond this month. That could come next year, but that is subject to change as well.
"We're now focusing on two things: the next time we'll have a debate on the (debt ceiling) issue, which is February, and tapering," analyst David Wilson with Citi told Reuters on Friday. "The debate has moved on from if to when (tapering will happen), so that will be continually factored into the gold price."
Analyst advises sell
The analyst told the news source that wise men will unload the yellowish metal.
"Right now, I think gold's a sell," Wilson told Reuters. "I would think the trading range we had in the five or six days before (Thursday) is one we'll go back to."
MarketWatch reports gold futures surged as much as $40 dollars per troy ounce during the Thursday trade session as a result of the agreement regarding the debt ceiling.
The U.S. was able to avoid defaulting for the first time on financial obligations but that agreement only pushes up the next time that feuding political parties take up the issue to next year.
"In a nutshell, we are back to business as normal where the U.S. government spends way too much money; which we have to borrow on the global market," managing director Jeffrey Wright with H.C. Wainwright LLC told the MarketWatch. "We have no realistic way to pay it back and even with a 'shrinking' rate of deficits, the situation is not sustainable."
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