Gold Price News: Gold Eases to Compound Week-on-Week Losses

Gold prices fell for a second day on Friday, extending losses seen earlier in the week, after the wider financial markets went into risk-on mode.

Prices eased as low as $2,833 an ounce on Friday, down from around $2,877 an ounce in late deals on Thursday. That compares with Monday’s all-time high of $2,958 an ounce.

While gold could yet push higher to breach the $3,000 an ounce level for the first time, momentum began to look more bearish last week after prices failed to push through upside resistance levels, prompting some market observers to ask if gold prices have peaked.

Macro factors take shine off gold’s safe-haven appeal

Sentiment in the wider financial markets has also begun to look more positive, and this represents a negative for safe-haven assets like gold. A number of factors have fed into this picture. First, a peace deal in Ukraine is looking increasingly likely, even if uncertainty over the exact terms leaves questions over disputed territory and the presence of outside peacekeeping forces.

Second, the Chinese National People’s Congress is set to kick off on March 5, and markets are alive to the possibility of stimulus measures that could support the economy, in turn giving Chinese investors a reason to divert capital into higher-risk assets like stocks, and away from non-yielding precious metals.

Dollar strength weighs on gold

In addition, the US dollar rose to a two-week high against the Euro on Friday, and a stronger dollar naturally puts downward pressure on dollar-denominated gold prices as it makes the precious metal more expensive for buyers in other currencies.

Upcoming data

Looking ahead, Monday will bring Euro Area inflation figures for February, providing signals on monetary policy changes by the ECB. These will be followed by the US ISM manufacturing numbers for February, for an update on US economic conditions.