Investing.com - Gold prices edged lower on Friday, as a recovery in the U.S. dollar and stronger global equity markets dented the metal’s safe-haven appeal, prompting market players to take profits after a sharp rally the day before.
Gold for April delivery on the Comex division of the New York Mercantile Exchange slumped $10.70, or 0.85%, to end Friday’s session at $1,254.30 a troy ounce.
The dollar recovered from a five-month low on Friday, as investors bought back greenbacks ahead of the weekend following an aggressive selloff earlier in the week.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, tacked on 0.3% on Friday to settle at 95.07, moving away from a five-month low of 94.61 hit overnight.
Meanwhile, global stock markets ended mostly higher on Friday, with the S&P 500 closing positive for the year for the first time in 2016, joining the Dow Jones industrial average in the green year-to-date.
A day earlier, gold soared $35.30, or 2.86%, after the Federal Reserve surprised markets by cutting its rate hike projections more than expected, down from four to two in 2016.
The Fed scaled back forecasts for how high interest rates will rise this year following the conclusion of its policy meeting on Wednesday, citing the potential impact from weaker global growth and financial market turmoil on the U.S. economy.
Investors and economists dialed back their own rate hike expectations in wake of the Fed’s surprisingly dovish outlook, with traders of interest-rate futures now seeing no rate rise before September. A gradual path to higher rates is seen as less of a threat to gold prices than a swift series of increases.
For the week, gold prices dipped $2.20, or 0.39%, the fourth losing week in five. Despite recent losses, prices of the yellow metal are up nearly 16% so far this year as investors seek safe havens in the face of mounting instability in other financial markets and as fears over a China-led global economic slowdown make it tougher for the Fed to raise rates.
Also on the Comex, silver futures retreated from the strongest level in more than four months as a round of profit-taking weighed. Silver for May delivery slumped 22.2 cents, or 1.38%, on Friday to close at $15.81 a troy ounce, after rallying to an intraday peak of $16.17, the most since October 28.
On Thursday, silver prices soared 81.4 cents, or 5.35%, tracking strong gains in gold. For the week, prices logged a gain of 29.1 cents, or 1.32%.
Elsewhere in metals trading, copper for May delivery hit a daily high of $2.323 a pound, a level not seen since November 4, before giving back gains to end the week at $2.282, down 1.0 cent, or 0.44%.
For the week, Comex copper prices rose 1.7 cents, or 1.83%, boosted by a weaker dollar and a more dovish U.S. rate outlook.
In the week ahead, market players will be turning their attention to Friday’s final reading on U.S. fourth quarter gross domestic product for fresh indications on the strength of the economy.
Reports on U.S. durable goods orders and home sales will also be in focus, as investors attempt to gauge if the world's largest economy is strong enough to withstand further rate hikes in 2016.
Investors will also be paying close attention to a number of speeches from key Fed officials this week, including James Bullard, Dennis Lockhart, Jeffrey Lacker, Charles Evans and Patrick Harker.
Ahead of the coming week, Investing.com has compiled a list of these and other significant events likely to affect the markets.
Monday, March 21
The U.S. is to release data on existing home sales. Meanwhile, Richmond Fed President Jeffrey Lacker, Atlanta Fed President Dennis Lockhart and St. Louis Fed President James Bullard are due to speak throughout the day.
Tuesday, March 22
The euro zone is to release survey data on manufacturing and service sector activity. Germany and France are also to release individual reports.
Meanwhile, the Ifo research institute and the ZEW Institute will produce individual reports on March German business sentiment.
The U.K. is to publish data on consumer inflation.
Chicago Fed President Charles Evans and Philadelphia Fed President Patrick Harker will deliver speeches during the day.
Wednesday, March 23
The U.S. is to release a report on new home sales.
Thursday, March 24
The U.S. is to release reports on durable goods orders and initial jobless claims, while St. Louis Fed President James Bullard is due to speak on the U.S. economy and monetary policy.
Friday, March 25
The U.S. is to round up the week with a final reading on U.S. fourth quarter gross domestic product.
Markets are closed Friday for Good Friday. Below-average trade volume in a holiday-shortened week could exacerbate any moves and increase volatility.