Gold miners and sector-related ETFs strengthened Friday, with gold prices rising to a near two-week high, as the U.S. dollar pulled back on the weak inflation data.
Among the best performing non-leveraged ETFs of Friday, the ETFMG Junior Silver Miners ETF (NYSEArca: SILJ) advanced 4.9%, VanEck Vectors Gold Miners ETF (NYSEArca: GDXJ) rose 3.2%, Sprott Gold Miners ETF (NYSEArca: SGDM) added 3.3% and VanEck Gold Miners ETF (NYSEArca: GDX) gained 2.1%.
Meanwhile, Comex gold futures were 0.7% higher to $1,288.7 per ounce and Comex silver fuures were up 0.9% to $15.1 per ounce.
“The main reason is the fact that dollar is pulling lower today. It’s a bit of head-scratcher, that the dollar is so low on a great GDP number in the U.S.,” Bob Haberkorn, senior market strategist at RJO Futures, told CNBC. ”(However) We have be cautious about this move. It looks like a false positive because I expect equities to continue to be strong next week, pressuring the precious metals.”
The U.S. Dollar Index, which tracks the USD’s movements against a basket of widely observed developed market currencies, was down 0.1% to 98.0. The weaker greenback makes it cheaper for foreign buyers to acquire the USD-denominated gold bullion.
While the Commerce Department said the U.S. economy expanded at a strong pace over the first quarter, the soft inflation data helped offset any tailwind in the U.S. dollar. The core personal expenditures consumption price index figure, the Federal Reserve’s preferred inflation gauge, only advanced at a 1.3% rate in the first quarter, compared to the 1.8% rate in the previous quarter.
“Also, there seems to be a bit of short covering as we are heading in to the weekend and some technical buying,” Jim Wyckoff, senior analyst with Kitco metals, told CNBC.
Gold’s previous weakness was partially attributed to the strong U.S. dollar, which neared a 22-month high against its peers, along with the general risk-on attitude.
“A good portion of gold’s weakness has come from recent highs in the dollar against major currencies, and lack of safe-heaven buying amidst equity markets continuing higher and slightly better global economic outlook.” David Meger, director of metals trading at High Ridge Futures, previously told Reuters.
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