Gold pulls back, but on pace for second weekly rise in a row

Gold prices traded slightly lower Friday, but futures were on track to log a second weekly gain in a row as demand for assets perceived as risky waned and as the U.S. dollar retreated to near seven-week lows.

April gold GCJ7, +0.08%  fell $2.20, or 0.2%, to $1,245 an ounce, with the precious metal aiming for a 1.3% weekly gain. Meanwhile, the commodity’s sister metal, silver for May delivery, SIK7, +0.89%  was up 4 cents, or 0.2%, at $17.63 an ounce, on track for a 1.3% weekly advance.

Colin Cieszynski, chief market strategist at CMC Markets, said that momentum for gold, which has climbed in five out of the past six sessions, may be tapering.

A pullback in the dollar which has been trading around a seven-week low, has helped assets priced in dollars to trade higher. As measured by the ICE U.S. Dollar Index DXY, -0.12% a measure of greenback against six rival currencies, the buck was slightly lower Friday and staring at a 0.6% weekly decline. A softer dollar can make assets pegged to the currency more appealing to buyers using other monetary units.

The dollar, and assets considered risky like stocks, have been stalling out after a run of records amid heightened concerns about President Donald Trump’s ability to put in place pro-growth legislation, highlighted by the president’s struggle to get the House to pass a bill that would repeal and replace former President Barack Obama’s signature health-care law, known as the Affordable Care Act, or Obamacare. A vote on the new health bill is slated for later Friday, with a failure seen by some as signaling that Trump may face headwinds on other parts of his ambitious agenda.

Gold has mostly benefited in this environment but some market strategist see the path for further rises fading somewhat.

“Gold has started to drop back as its latest rally runs out of gas,” said Cieszynski. He said a recent reading of an asset’s momentum, known as relative strength index, suggests that the recent upswing may be “getting tired” and predicted that a pullback around the $1,242 an ounce, then $1,230 an ounce, as possible.

On the economic front, new orders for durable goods climbed in February for the second straight month. Durable-goods orders advanced 1.7% while the increase in January was raised several notches to 2.3%, reflecting a pickup in manufacturing that kicked in toward the end of last year.

In exchange-traded funds that track metals, the SPDR Gold Trust GLD, +0.20% was off 0.1%, the VanEck Vectors Gold Miners ETF GDX, +0.13%  was down 0.3%, while the iShares Silver SLV, +0.72%  gained 0.1%.

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