Gold Rises for Fifth Straight Week as Central Banks Hint at Additional Stimulus

August Comex Gold futures rose 1 percent on Friday with investors ignoring the stock market rally and reacting to a weaker U.S. Dollar instead. A higher close today will mark the fifth straight week of gains for the precious metal. The dollar fell on speculation the Fed will cut its benchmark interest rate. Gold also received a boost on talk of additional stimulus from the Bank of England, the European Central Bank and the Bank of Japan. Gold will be particularly sensitive to any move that involve negative interest rates.

September Comex Silver also posted a strong gain, breaching the $19 an ounce level on Friday for the first time since September 2014. It was up as much as 3.8 percent to $19.40.

Concerns about the global economy have made a U.S. rate hike in July or September less likely, but much will depend on next week’s economic data especially next Friday’s U.S. Non-Farm Payrolls report.

Low U.S. interest rates will be a positive for gold because it will reduce the dollar’s attractiveness to foreign investors.

The weaker U.S. Dollar couldn’t help crude oil prices on Friday with the U.S. August futures contract trading at $48.14, down $0.19 or -0.39%. With production problems in Canada and Nigeria diminishing, investors turned their focus toward the supply glut. News that OPEC production reached a record high in June also weighed on prices.

According to Reuters, oil output from OPEC rose to 32.82 million barrels per day (bpd) in June, and the cartel expects demand for its supplies to be higher still.

Despite growing signs of lingering oversupply, U.S. Energy Secretary Ernest Moniz said on Friday he expected oil supply and demand to balance by 2017.

The GBP/USD traded flat most of the session. The EUR/USD was marginally higher. Volume was down today in the Forex markets as many of the major players took the day off ahead of Monday’s U.S. bank holiday.

Talk of additional stimulus helped push U.S. stocks higher. Better-than-expected U.S. economic data also helped underpin the major indices. According to reports, the U.S. manufacturing sector edged up to a three high in June, helped by the fastest rise in New York since March.

According to Markit, final U.S. Manufacturing Purchasing Managers Index was 51.3 in June, down marginally from the preliminary 51.4 number reported. May’s 50.7 reading was the weakest on the manufacturing sector since September 2009. Economists were looking for a reading of 51.4.