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Gold Hits $1,300, but Closes Down; Awaits Direction as Powell Turns 'Patient'

Published 01/04/2019, 02:38 PM
Updated 01/04/2019, 03:10 PM
© Reuters.

Investing.com - Gold hit its much-awaited $1,300 target Friday, triggering an equally anticipated profit-taking raid that allows the market a breather after a three-week buildup.

COMEX gold futures settled down $9, or 0.7%, at $1,285.80 after scaling a 7-month high of $1,300.35.

It was the first lower settlement for gold since the start of the new year. Still, the yellow metal ended the week in positive territory, helped by gains in the past three sessions.

Friday's slide in gold came as equities markets took off again on a stellar U.S. jobs report for December.

Stocks and gold typically move in opposite directions. U.S. nonfarm payrolls grew by 312,000 in December, almost double economists' expectations, sending Wall Street buyers into a frenzy.

Even so, gold bugs might have as much optimism going forward as stock market traders.

For one thing, Fed Chairman Jerome Powell has signaled that he might be more "patient" with rate hikes in 2019, just as President Donald Trump has been hoping the central bank would.

Although the dollar did not crumble after Powell's remarks on Friday, fewer rate hikes could mean a higher potential for inflation, something that usually boosts gold as a store of value,

Thomas Barkin, the Richmond Fed president, meanwhile, said he expected the U.S. economy to grow more slowly in 2019 compared to 2018, citing risks such as trade policy and financial market volatility. That, in theory, supports gold's standing as a hedge against the economy.

"The financial advisors we speak with continue to advise their clients to diversify part of their portfolios and invest in the gold market on a dollar cost averaging basis," said Walter Pehowich, executive vice-president at Dillon Gage Metals in Addison, Texas. "Clients who took their advice a few months ago have benefited from a gold market that’s up over one hundred dollars in just a few months."

In other precious metals on COMEX, silver futures fell 0.3% to $15.75 per troy ounce by 2:36 PM ET (19:36 GMT).

Palladium jumped 2.8% to $1,234.40. Sister metal platinum surged by 3.3% to $825.90.

In base metals, COMEX copper rallied by 3.2% to $2.65 per pound.

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