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Gold falls 1% amid heavy profit taking, capping volatile week of trading

CommoditiesMar 18, 2016 01:05PM ET
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Gold fell by more than $10 an ounce on Friday to close below $1,255

Investing.com -- Gold futures retreated on Friday amid heavy profit taking, after soaring as much as $50 an ounce over the previous two sessions following dovish comments from the Federal Reserve on the timing of future interest rate hikes earlier in the week.

On the Comex division of the New York Mercantile Exchange, gold for April delivery traded between $1,248.60 and $1,267.60 an ounce before settling at 1,252.20, down 12.80 or 1.01% to 1,252.20. It came one day after gold surged nearly 2.5%, enjoying its strongest one-day move on the month. For the week, gold closed slightly lower during a volatile, choppy period of trading. Since hitting 13-month highs late last week, gold has closed lower in five of the last six sessions.

Nevertheless, the precious metal is still up by more than 17% since the start of the year and is on pace for its best opening quarter in 30 years.

Gold likely gained support at $1,063.20, the low from January 4 and was met with resistance at $1,280.70, the high from Mar. 11.

Metal traders could be looking forward to a quiet weekend, following a volatile stretch spurred by key interest rate decisions from four of the world's top central banks over the last 10 days. On Wednesday, the Federal Open Market Committee (FOMC) sent the dollar spiraling to five-month lows against the euro, by lowering its interest rate forecast through 2018. Citing increased global financial and economic risks and a soft inflation outlook, the Fed held the target range on its benchmark Federal Funds Rate at 0.25-0.50% for the second consecutive meeting. More importantly, the U.S. central bank slashed its year-end projection for the Fed Funds Rate to 0.88%, signifying two rate hikes for the remainder of the year.

After raising short-term interest rates in December for the first time in nearly a decade, the FOMC said in its median forecasts that it could hike rates as much as four times in 2016. Any rate hikes by the Fed this year are viewed as bearish for gold, which struggles to compete with high yield bearing assets in periods of rising rates.

Elsewhere, the Dow Jones Industrial Average rose steadily on Friday to reach fresh 2016 yearly highs. U.S. stocks are on pace for their fifth consecutive weekly gain, their longest winning streak in two years. The massive rally in global equities has dampened gold's appeal as safe-haven asset.

The U.S. Dollar Index, which measures the strength of the greenback versus a basket of six other major currencies, gained more than 0.30% to an intraday high of 95.14.

Dollar-denominated commodities such as gold become more expensive for foreign purchasers when the dollar appreciates.

Silver for May delivery plunged 0.268 or 1.67% to 15.765 an ounce.

Copper for May delivery lost 0.009 or 0.37% to 2.283 a pound.

Gold falls 1% amid heavy profit taking, capping volatile week of trading
 

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Bugsy SouthUK
Bugsy_SE_UK Mar 18, 2016 3:00PM ET
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Yes profit taking? Well then the world really is screwed up then isn't it! Apparently the helicopters are waiting to return with cash, just before they get rid of cash (real ? money) altogether!
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Gino11able .
Gino11able . Mar 18, 2016 2:05PM ET
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When was the last time gold's declined was attributed to 'profit taking'?
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