UPDATE: Gold takes a leg lower, but hangs on for first weekly gain in a month

11/10/17 03:33 PM EST

By Mark DeCambre, MarketWatch , Rachel Koning Beals

Silver futures end down for the day but register slight weekly gain

Gold futures settled sharply lower Friday, even as both stocks and the dollar, which typically move inversely to precious metals, slumped on the back of waning confidence for economy-boosting tax reform.

December gold slipped $13.30, or 1%, to finish at $1,274.20 an ounce, a day after posting its highest finish since Oct. 16, according to FactSet data. The metal booked its first weekly gain of the past four weeks. The exchange-traded SPDR Gold Trust (GLD) fell 0.9%.

For the week, however, gold futures rose 0.4% as the U.S. dollar declined late in the week after the Senate's tax-cut proposal (http://www.marketwatch.com/story/highlights-of-the-senates-tax-reform-plan-2017-11-09) underwhelmed., providing a lift to commodities priced in the currency.

"Lawmakers must now try to reconcile this offering with the one emerging from the House. This hints at seesaw volatility ahead as Fed rate hike bets oscillate with incoming headlines from Washington," said Ilya Spivak, currency and commodity strategist with Daily FX.

Investors said a big order to sell gold futures during the day helped to further drive prices lower.

Peter Hug, global trading director at Kitco Metals said the fall for gold triggered programmatic, technical trading. "Once gold fell below the $1,282 level, it triggered technical stops and the selling accelerated," he said.

Ira Epstein, managing director at commodities broker Linn Group, said sentiment for gold may be dampened by a belief that the tax bill would prove less stimulative to the economy than had previously been hoped. Epstein hypothesized that against the backdrop of an improving economy and sluggish inflation, gold serves as a hedge to rising prices, with buying in the yellow metal likely elevated as a result.

"So, now gold. is left with the one thing that it had before higher interest rates," Epstein said, referring to expectations that Federal Reserve will increase interest rates once more before the end of 2017. Higher rates tend to make gold, which doesn't bear interest, less attractive on relative terms.

Benchmark bond yields, meanwhile, have picked up steam. The yield on the 10-year Treasury (http://www.marketwatch.com/story/treasury-yields-hold-ground-ahead-of-auction-fed-speeches-tax-bill-2017-11-07) was at 2.38% on Friday, compared with 2.33% at the start of the week. (http://www.marketwatch.com/story/treasury-yields-hold-ground-ahead-of-auction-fed-speeches-tax-bill-2017-11-07)

The ICE U.S. Dollar Index , which measures the buck against six rivals, was flat after coming under pressure in early trade. The index fell sharply Thursday, logging its biggest decline since Oct. 10, according to FactSet data.

Some gold investors said Friday's selling also was due to investors capturing gains after a good week of gains for gold.

"In my view the fall in gold is profit-taking before the close of the week and also the inability to break past $1,293 resistance," said Chintan Karnani, chief market analyst at Insignia Consultants, based in New Delhi.

In other metals, silver for December delivery, fell 10.4 cents, or 0.6%, to settle at $16.871 an ounce, also getting knocked lower after trading in positive territory earlier. The white metal posted a weekly rise of 0.2%. The exchange-traded iShares Silver Trust (SLV) was down 0.6%.

Read:Silver's bullish underpinning--it's an essential metal for these 3 growth industri (http://www.marketwatch.com/story/silvers-bullish-underpinning-its-an-essential-metal-for-these-3-growth-industries-2017-11-08)es

Palladium pulled back from the 16-year highs hit this week. The December contract fell $11.30, or 1.1%, to end at $993.10 an ounce, booking a weekly increase of 0.2%. It settled Wednesday at $1,015.85 an ounce--the highest since February 2001. January platinum fell $8.50, or 0.6%, to settle at $932.10 an ounce, but advanced 1.1% for the week.

Read:Palladium just settled above $1,000 an ounce for first time since 2001 (http://www.marketwatch.com/story/palladium-just-settled-above-1000-an-ounce-for-first-time-since-2001-2017-11-08)

December copper declined by a penny, or 0.5%, to $3.076 a pound, recording a weekly decline of 1.3%.

-Mark DeCambre; 415-439-6400; AskNewswires@dowjones.com

 

(END) Dow Jones Newswires

11-10-17 1533ET

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