Gold futures weekly recap, March 24 – March 28

Gold futures fell to the weakest level in six weeks on Friday, capping a second weekly loss, as further signs of recovery in the US backed the case for the Federal Reserve to keep cutting stimulus. Meanwhile, assets in the SPDR Gold Trust, the biggest bullion-backed ETF, remained unchanged on Friday.

On the Comex division of the New York Mercantile Exchange, gold futures for settlement in April rose 0.07% on Friday to settle the week at $1 295.70 an ounce. Prices shifted in a daily range between $1 299.40 an ounce and $1 286.40 an ounce, the weakest since February 13. Gold slid 3 percent this week, the second straight decline.

Bullion has retreated 7.1% since reaching a six-month high of $1 392.60 an ounce on March 17 as the US economy expanded at a faster-than-expected pace and Federal Reserve Chair Janet Yellen said the central banks bond-buying program may be brought to an end this fall, with borrowing costs starting to rise by mid-2015.

“Prices come under pressure when there’s a lack of concern about economic risks,” said Kevin Caron, a Florham Park, New Jersey-based market strategist at Stifel Nicolaus & Co., which manages about $160 billion, cited by Bloomberg. “There’s probably more weakness ahead.”

However, the precious metal rose 7.7 percent this quarter as global growth faltered and as turmoil over Ukraine left Russia and the West involved in their worst conflict since the end of the Cold War.

Fed stimulus outlook

Gold prices were pressured after data showed consumer spending in the US rose in February by the most in three months as incomes increased, adding to evidence the economy is gaining momentum after the unusually harsh winter.

Consumer spending, which accounts for almost 70% of the American economy, rose 0.3% last month, in line with analysts’ estimates and after a 0.2% increase in the previous month that was smaller than previously reported. Incomes also advanced 0.3% in February, in line with analysts’ expectations and matching January’s gain, data by the US Commerce Department showed today.

The US citizens were trying to shrug off the effects of the inclement weather as they rushed out to shop, supported by a labor market that was also gaining traction.

“Looking past some of the noise in the data, the trend is for modestly stronger personal income and spending, which should accelerate throughout the year as the economy builds momentum,” Michelle Meyer, a senior U.S. economist at Bank of America Merrill Lynch in New York, said before the report, cited by Bloomberg.

Friday’s data also revealed that core price, excluding the volatile food and fuel items, inched up 0.1% last month and were up 1.1% from the previous year, the same as in January and in line with analysts’ estimates.

Also fanning negative sentiment, the US economy expanded more rapidly in the final three months of 2013 than previously estimated as consumer spending jumped by the most in three years, while initial jobless claims unexpectedly declined last week, curbing demand for the precious metal as a store of value.

The US economy expanded at a 2.6% annualized rate in the final three months of 2013, slightly below analysts’ expectations of a 2.7% gain, but up from a preliminary estimate of 2.4%, a report by the the Bureau of Economic Analysis showed yesterday. The US gross domestic product grew 4.1% in the third quarter.

Assets in the SPDR Gold Trust, the biggest bullion-backed ETP, were unchanged at 816.97 tons yesterday. Holdings in the fund are up 1% this year after it lost 41% of its assets in 2013 that wiped almost $42 billion in value. A total of 553 tons has been withdrawn last year.