Investing.com -- Gold futures surged on Friday ending a four-day losing streak, as the Chinese equity crisis and the timing of a closely-watched interest rate hike from the Federal Reserve remained in focus.
On the Comex division of the New York Mercantile Exchange, gold for December delivery traded between $1,123.10 and $1,140.30 before settling at $1,134.70, up 12.00 or 1.07% on the session. Earlier in the week, gold reached a six-week high moving above $1,165 an ounce, before plunging more than 1% on two consecutive sessions. For the week, the precious metal closed down by roughly 2.5%.
Gold likely gained support at 1,117, the low from August 27 and was met with resistance at 1,169.80, the high from Aug. 24.
Metal traders await a panel discussion by several influential central bankers on Saturday at a conference in Jackson Hole for further indications on how global inflation could impact the Fed's decision on hiking short-term interest rates next month. The three-day summit at the mountaintop resort in Wyoming will conclude on Saturday with the most anticipated event of the conference – a symposium featuring Fed vice-chair Stanley Fischer, Bank of England governor Mark Carney and Reserve Bank of India governor Raghuram Rajan.
Fischer, a noted Dove, could provide some clarity on the Fed's relatively ambiguous interpretation of its short-term projections on inflationary growth. Last week's release of the July minutes from the Federal Open Market Committee's last meeting painted a picture of a sharply divided Fed regarding their views on inflation. The FOMC said by some objectives the inflation data was "not progressing" toward its targeted goal, according to the minutes. Other members, however, said that inflation conditions for a rate hike would be met or could be "met shortly."
The Consumer Price Index for July inched up 0.1% on a month over month basis, below consensus estimates of a 0.2% increase. The Core CPI, which strips out food and energy prices, also rose modestly by 0.1%, falling below analysts' expectations. The yearly reading, which is a preferred gauge of inflation by the Fed, increased by 1.8%. In every month over the last three years, Core CPI on a year-over-year basis has fallen below the Fed's target of 2%.
Gold, which is not attached to dividends or interest rates, struggles to compete with high-yield bearing assets in rising rate environments.
The U.S. Dollar Index, which measures the strength of the greenback versus a basket of six other major currencies, rose more than 0.5% to an intraday high of 96.35, before falling back slightly to 96.20 in U.S. afternoon trading. The index is on pace for its fourth consecutive positive close.
Dollar-denominated commodities such as gold become more expensive for foreign purchasers when the dollar appreciates.
In China, the Shanghai Composite Index closed approximately 5% higher, amid a flurry of last-minute gains shortly before the final bell. For the week, the index still lost nearly 8% as the People's Bank of China continues to look for ways to stem the worst sell-off in Chinese equities in more than a decade.
Silver for September delivery gained 0.088 or 0.61% to 14.505 an ounce.
Copper for September delivery rose 0.011 or 0.48% to 2.345 a pound.