Investing.com - Gold prices rose on Friday, reversing earlier losses as the Catalonian parliament's declaration of independence bolstered safe haven demand for the precious metal.
Gold futures for December delivery settled up 0.51% at $1,276.06 on the Comex division of the New York Mercantile Exchange. Prices had earlier dropped to a three week low of $1,263.80. For the week gold prices were down 0.68%.
Catalonia’s parliament on Friday declared independence from Spain, adding to fears over instability in the European Union. The moves prompted Spain’s prime minister to sack the Catalan government and call elections next month.
Bullion is often used as a safe haven in times of geopolitical and economic uncertainty, while riskier assets such as equities are generally sold off.
Gold’s gains were held in check as the U.S. dollar continued to trade near three month highs against a currency basket.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was up 0.18% at 94.72 in late trade.
The index hit a high of 95.06 earlier in the session, its strongest level since July 17. For the week the index was still up 1.33%, its largest weekly increase so far this year.
The dollar eased following a report that U.S. President Donald Trump is considering nominating Federal Reserve Governor Jerome Powell to lead the U.S. central bank, a move that would signal continuity for monetary policy.
Powell is seen less hawkish than Stanford University economist John Taylor, another potential nominee to lead the Fed.
The dollar rose earlier after the Commerce Department reported that the U.S. economy grew at a 3% annual rate in the third quarter, better than forecasts for growth of 2.5%.
The stronger-than-expected reading underlined the case for the Fed to raise interest rates at a faster pace in the coming months. Higher rates tend to make the dollar more attractive to yield seeking investors.
The dollar had already received a boost on Thursday after House Republicans passed a budget blueprint for 2018, setting the stage for a tax overhaul.
Some investors believe tax reforms could bolster growth, adding pressure on the Fed to raise interest rates, known as the "Trumpflation" trade.
Gold is highly sensitive to rising rates, which lift the opportunity cost of holding non-yielding assets such as bullion, while boosting the dollar, in which it is priced.
Elsewhere in precious metals trading, silver was up 0.4% at $16.87 a troy ounce late Friday, paring its weekly decline to 1.07%, while platinum settled at $918.40, down 0.4% for the day.
Among base metals, copper was down 2.31% at $3.104 in late trade amid profit taking by investors. For the week copper was down 1.81%, the first weekly fall in five weeks.
In the week ahead, investors will be focusing on Wednesday’s Fed meeting for fresh clues on the likely trajectory of monetary policy. Friday’s U.S. jobs report for October will also be closely watched.
Ahead of the coming week, Investing.com has compiled a list of these and other significant events likely to affect the markets.
Monday, October 30
Germany is to release preliminary inflation data and a report on retail sales.
The UK is to report on net lending.
The U.S. is to release data on the core personal consumption expenditures price index and personal spending.
Tuesday, October 31
New Zealand is to publish a report on business confidence.
China is to publish official data on manufacturing and service sector activity.
The Bank of Japan is to announce its benchmark interest rate and publish a rate statement which outlines economic conditions and the factors affecting the monetary policy decision. The announcement is to be followed by a press conference.
The euro zone is to publish preliminary data on inflation and third quarter economic growth.
Canada is to release data on economic growth and raw material price inflation. Later in the day, Bank of Canada Governor Stephen Poloz is to testify before the House of Commons Standing Committee on Finance, in Ottawa.
The U.S. is to release a string of reports including data on the employment cost index, business activity in the Chicago region and consumer confidence.
Wednesday, November 1
The UK is to release a report on manufacturing activity.
The U.S. is to release the ADP nonfarm payrolls report and later in the day the Institute for Supply Management is to publish its manufacturing index.
The Fed is to announce its benchmark interest rate and publish a rate statement which outlines economic conditions and the factors affecting the monetary policy decision.
Thursday, November 2
Australia is to release data on the trade balance and building approvals.
The UK is to release a report on construction activity.
The Bank of England is to announce its latest interest rate decision and publish its meeting minutes. BoE Governor Mark Carney is to hold a press conference to discuss the decision.
The U.S. is to release the weekly report on initial jobless claims along with data on labor productivity and costs.
New York Fed President William Dudley is to speak.
Friday, November 3
Financial markets in Japan will be closed for a holiday.
Australia is to report on retail sales.
China is to publish its Caixin services index.
The UK is to release a report on service sector activity.
Canada is to release its latest employment report along with trade data.
The U.S. is to round up the week with the nonfarm payrolls report for October as well as data on trade and factory orders and the ISM is to publish its non-manufacturing index.