Gold Futures Set to Post Biggest Weekly Rise in Five Weeks

June Comex Gold futures posted a small gain on Friday and are set to finish the week higher. Volatile two-sided action in the equity markets this week encouraged investors to park some profits in gold as a hedge. Also helping to produce gold’s biggest weekly rise in five weeks was cautious talk from Federal Reserve officials regarding the timing of U.S. interest rate increases.

Helping to underpin gold this week was the weaker U.S. Dollar. The dollar continued to remain under pressure amid comments from Fed Chair Janet Yellen who said the U.S. economy is still on track to warrant further rate rises. But U.S. interest rate futures still indicate a less than 20 percent chance of a rate hike in June.

May crude oil futures were up 6% on Friday, lifted by hopes that the global supply glut of oil could be near a tipping point and firm economic indicators from the United States and Germany that could lead to increased fuel demand.

Traders are banking on declines in U.S. shale oil output and optimism over a proposed freeze in oil production to continue to underpin the market.

The GBP/USD rebounded after early session weakness to post a modest gain, but the Sterling remained at the lower end of its two month range. Friday’s U.K. data printed below forecast, with the Manufacturing Production showing a -1.1% decline compared to the projected -0.2%.

In other news, the U.K. Goods Trade Balance posted a reading of -12.0B versus an estimate of -10.3B. Industrial Production came in at -0.3% versus a forecast of 0.1%.

The weaker dollar helped boost the Euro, but the EUR/USD remained inside yesterday’s range. Helping to put a lid on prices were concerns the European Central Bank may have to take action to stem the single-currency’s rise.

German Trade Balance data came in at 19.8B, above the 19.2B. French Industrial Production was -1.0%, worse than the -0.3% forecast.