Gold Rally Shines On, Oil Edges Higher

By Glenn Dyer | More Articles by Glenn Dyer

Gold prices again charged higher on Friday, closing within sight of the $US2,000 a level after losing ground on Thursday for the first time in 10 sessions.

The weak US dollar has helped push prices higher in July (as it has done for copper, gold, and silver)

Comex December gold which is now the most-active contract, jumped $US19.10, or 1%, to close at $1,985.90 an ounce.

In after-hours trading it rose higher, ending the week at $US1,994 and should top the $US2,000 level sometime Monday given the propensity of traders to push prices up when approach such an important key price level.

For the week, bullion climbed 4.7%, while the 10.3% gain in July was the biggest monthly rise since February of 2016, according to the FactSet financial data company.

August gold climbed by $US19.10, or 1%, to $US1,985.90 an ounce, after dropping $US11.10 to settle at $US1,942.30 an ounce on Thursday. Gold had settled at a record on Wednesday before Thursday’s dip.

Friday’s surge came despite solid earnings from major tech companies like Apple and Amazon. The continuing rise in COVID-19 cases and accelerating deaths are undermining confidence in the health of the economy.

The US dollar’s continuing weakness though was probably the biggest factor.

The US Dollar Index which tracks the currency against six major rivals, dropped to a more-than-two-year low last week and tumbled more than 4% in July, its biggest monthly decline since September 2010, according to FactSet.

The index though rose 0.3% on Friday which should have capped the surge in gold prices but it had no impact.

The stronger greenback had no impact on silver as well and the Comex September silver contract leapt 85.4 cents, or 3.7%, to settle at $US24.216 an ounce, following the near 4% slide on Thursday.

Silver futures prices had settled on Monday at the highest since 2013. For the week, silver fell 1.2%, but was up nearly 30% based on the most-active settlements.

Elsewhere on Comex, September copper fell by 4.6 cents, or 1.6%, to $US2.868 a pound, with a weekly fall of 1% (all of that on Friday) and a monthly rise of 5.1%.

Meanwhile, oil prices ignored the end of the 9.7 million barrels a day OPEC + (with Russia) oil production cut on Friday and headed higher on Friday.

From Saturday OPEC members, Russia and other producers such as Mexico will be allowed to add a total of two million barrels a day to their output.

Some analysts see the market struggling with this expected uptick in production, others are relaxed claiming demand is there.

But the upsurge in COVID-19 cases, growing lockdowns and other restrictions (and the continuing absence of global airline traffic in significant numbers) has some traders wondering if those not worried about the extra output are kidding themselves.

West Texas Intermediate (WTI) crude for September delivery rose 35 cents, or 0.9%, to close at $US40.27 a barrel in New York, while in Europe October Brent crude was up 27 cents, or 0.6%, to finish at $US43.52 a barrel.

WTI logged a monthly rise of around 2.6%, while Brent rose more than 5%.

Oil maintained the most gains after oil-field services company Baker Hughes said the number of active US oil rigs dropped by 1 to 180 last week. That reversed the previous week’s rise of one.

Glenn Dyer

About Glenn Dyer

Glenn Dyer has been a finance journalist and TV producer for more than 40 years. He has worked at Maxwell Newton Publications, Queensland Newspapers, AAP, The Australian Financial Review, The Nine Network and Crikey.

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