Gold futures weekly recap, August 11 – August 15

Gold futures traded in a relatively narrow range this week, as investors saw mixed economic data, as well as both tensions and relief on the geopolitical scene. US stocks found increased demand, while the dollar and euro failed to find a direction.

Gold futures for delivery in December dropped 0.72% on Friday, closing at $1,306.2 per troy ounce, ~0.3% down for the week. Weekly high and low were at, respectively, $1,321.8 on Thursday, which was also a three-week peak, and $1,293.0 per barrel on Friday. The contract added 1.4% last week.

Silver for September closed the week 1.6% higher at $19.553 per troy ounce, while palladium was up 4.2% at a thirteen-year high of $894.90. October platinum dropped 1.2% to close at $1,457.75.

Ukraine, Iraq

The controversial aid convoy, which Russia sent towards the embattled eastern regions of Ukraine, is to be inspected by Ukrainian authorities at the border, Kiev said.

The convoy was suspected of transporting military aid to pro-Russian rebels and Kiev said it would not allow it on Ukrainian territory.

Earlier, NATO and Kiev both warned of Russian combat-ready troops numbering 20,000-40,000 massed near the border with Ukraine, poised for an invasion. Moscow dismissed all allegations of a possible military intervention as well as accuastions that it is supplying the separatists.

NATO, however, confirmed reports that vehicles are entering rebel-controlled territory in Ukraine from Russia. “We see a continuous flow of weapons and fighters from Russia into eastern Ukraine, and it is a clear demonstration of continued Russian involvement,” Nato Secretary General Anders Fogh Rasmussen said.

Elsewhere, Iraq was still in focus, with EU foreign ministers meeting to decide whether to arm Iraqi Kurds.

Meanwhile, the political crisis seems to have eased, after incumbent PM Nouri Maliki announced he is stepping down, after days of confrontation and uncertainty. The move paves the way for a new government, possibly easing the fight against the jihadists if the Islamic State.

Iraq is OPEC’s second-top oil exporter with daily shipments of more than 2.5 million barrels. Most of the production is situated in the south of the country, well away from the militants who are fighting with Kurdish and government forces in the north.

US, EU economies

The US economy posted relatively downbeat results this week. Retail sales disappointed, while Michigan consumer sentiment and New York Empire Fed both logging below expectations. Jobless claims and PPI were also below par, though the dollar could hardly lose more, as the EU also posted quite bearish data.

The Eurozone posted disappointing figures this week, with CPI and quarterly GDP growth leaning towrds the red. The downturn prompted speculation that the ECB will step up monetary measures at its next meeting, paring the negative outlook from the economic gauges.

“There’s a big chance [the ECB] will have to revise their growth and inflation figures in September,” Thomas Harjes, senior European economist at Barclays Plc in Frankfurt, said for Bloomberg. “The ECB is in a tough position” and today’s data “certainly raise the pressure again” to increase stimulus.

The euro has a very strong opposite correlation with the US dollar, meaning a stronger euro directly decreases the value of the dollar.

Since gold, like many other commodities, is mostly traded in dollars, the value of the US currency plays a major role in the metal’s investment appeal, with a stronger dollar lifting the price of gold to foreign currencies and vice versa.

Dollar, stocks

The US Dollar Index, which measures the greenback’s performance against six other major currencies, was little changed this week, closing at 81.48.

US stocks found higher investor appetite, as global tensions were shrugged off by traders, allowing for all three major indices to log sizable weekly gains. S&P 500, a broad measurment of US companies, closed Fridays session for a 1.2% weekly increase; Dow 30 Industrial was up 0.7%, while Nasdaq 100, which excludes financial institutions, added 2.7%.

Elsewhere, assets at the SPDR Gold Trust, the largest exchange-traded gold-backed fund, were also little changed, after losing some 6 tons last week to stand at the lowest level in more than a month, signaling lower investor interest in the precious metal.

Next week

Next week will offer US housing data, and more importantly – CPI figures. Philly Fed will also be posted, while the Eurozone will report on manufacturing and services PMI.