Investing.com -- Gold futures fell mildly on Friday in spite of a broadly stronger dollar, as the precious metal continues to hover near five-year lows ahead of next month's critical policy decision from the Federal Reserve, where the U.S. central bank is expected to raise short-term interest rates for the first time in nine years.
On the Comex division of the New York Mercantile Exchange, gold for December delivery traded between $1,075 and $1,087.00 an ounce before settling at $1,077.20, down 0.60 or 0.06% on the session. It came one session after gold bounced off five-year lows, surging by more than $12 an ounce from Wednesday's close, amid considerable short covering from investors. Earlier in the week, gold plunged below $1,065 to its lowest level since February, 2010, as commodity traders continue to brace for a likely rate hike when the Federal Open Market Committee meets next on Dec. 15-16.
Gold still needs to suffer another dramatic sell-off to slip below $1,000 an ounce, a level not seen since the depths of the Financial Crisis.
Gold likely gained support at $1,064.00, the low from Nov. 18 and was met with resistance at 1,110.70, the high from Nov. 5.
On Friday morning, Federal Reserve Bank of St. Louis president James Bullard argued that he expects inflation to move back to the Fed's targeted goal of 2%, if the cost of oil stabilizes and other prices continue to increase at its current rate over the next year. In a speech on the economy and monetary policy in Fort Smith, Arkansas, Bullard also warned that U.S. job growth may slow as the Fed begins policy normalization. A host of FOMC members have offered strong hints that it will raise short-term rates next month following a stellar U.S. jobs report in October.
In recent months, Bullard has been one of the top advocates on the Fed for lifting the target range on its benchmark Federal Funds Rate. The rate, which banks use on interbank overnight loans at the New York Fed, has remained at near-zero levels since December, 2008.
Bullard's speech came ahead of a series of appearances by New York Fed president William Dudley throughout Long Island on Friday. On Wednesday, the New York Fed said it is honing aspects of its tri-party Reverse Repurchase Agreements (RPP), a tool it uses to help control the Federal Funds Rate. Dudley also said Wednesday in an appearance at the Clearing House Payments System Risk Symposium in New York that he doesn't expect a major market reaction to an initial rate hike since the move has been so widely telegraphed.
A rate hike is viewed as bearish for gold which struggles to compete with high-yield bearing assets.
The U.S. Dollar Index, which measures the strength of the greenback versus a basket of six other major currencies, surged more than 0.50% on Friday to an intraday high of 99.66. On Wednesday, the index reached as high as 99.97 on the final session of a four-day winning streak, jumping to its strongest level since mid-March.
Dollar-denominated commodities such as gold become more expensive for foreign purchasers when the dollar appreciates.
Silver for December delivery lost 0.102 or 0.72% to 14.120 an ounce.
Copper for December delivery plunged 0.022 or 1.05% to 2.055 a pound.