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What’s happening: Gold prices settled higher on Friday and recorded gains for the week.
What happened: The yellow metal hit an intraday record high, as heightened volatility in the financial markets resulted in investors adding more safe-haven assets to their portfolios.
Weakness in the US dollar also drove gold prices higher on Friday.
Why it matters: US and other equity markets have remained volatile so far this month, with a sharp selloff in major indices earlier in the month and a strong rebound last week. The heightened volatility resulted in investors moving towards the safety of gold.
The US released data on producer and consumer prices last week, which signalled an easing in inflation. Headline CPI inflation in the US slowed to 2.9% year-over-year basis in July, from 3% in June.
Data on easing inflation stroked speculations of the US Federal Reserve beginning to cut interest rates in September, providing a boost to gold prices. Lower interest rates reduce the costs of holding non-yielding bullion. They also negatively impact the US dollar, which makes the yellow metal cheaper for foreign currency holders.
The US dollar index, which measures the greenback’s performance versus a basket of major peers, fell around 0.6% to 102.40 on Friday to record the fourth week of losses.
Gold for December delivery gained $45.40, or 1.8%, to close at $2,537.80 an ounce on Comex, after jumping to a record intraday high of $2,538.70 earlier in the session.
Gold prices climbed 2.6% in the week and recorded gains in four of the five sessions. The yellow metal has risen by 2.7% month to date.
In other metals trading, silver futures rose $0.431, or 1.5%, to close at $28.849 an ounce, while palladium added $6.70 to reach $943.60. Platinum bucked the trend and fell $8.7 to settle at $962.4.
What to watch: Investors will continue monitoring the global geopolitical and economic situation, as gold is considered a hedge against these uncertainties.
Fed Chairman Jerome Powell’s comments on the US economic outlook, scheduled to be released on Friday, will also remain in focus.
Context: Shares of Applied Materials declined on Friday despite the company reporting better-than-expected quarterly earnings.
Details: Applied Materials managed to top market expectations for sales and earnings for the nineth straight quarter.
Revenues grew by 5% year-over-year to $6.78 billion, exceeding consensus estimates of $6.673 billion. The company reported adjusted earnings of $2.12 per share, topping Wall Street expectations of 2.02 per share.
Higher demand for data storage provided a boost to the company’s overall revenues in the latest quarter. Sales in China climbed to $2.15 billion, from $1.73 billion in the year-ago period. US sales rose to $1.05 billion, from $1.04 billion in the year-ago quarter.
The company generated cash from operations of $2.39 billion and closed the third quarter with $8.288 billion in cash and cash equivalents.
For the fiscal fourth quarter, management guided to revenues of $6.53 billion, plus or minus $400 million, and projected adjusted earnings between $2 and $2.36 per share.
How shares responded: Shares of Applied Materials fell 1.9% to settle at $207.90 on Friday, after the company released its quarterly results. The stock had lost around 6% over the past month.
What to watch: Investors will continue monitoring geopolitical concerns and export restrictions on semiconductor equipment to China, which could significantly impact the company’s overall results ahead.
Other Markets: European indices closed mostly higher on Friday, with the DAX 40, CAC 40 and STOXX Europe 600 Index up by 0.77%, 0,35% and 0.31%, respectively, while the FTSE 100 fell by 0.43%.
Russia said that its military had gained control of Ukraine’s Svyrydonivka village, which is close to the town of Pokrovsk in the eastern Donetsk region. The news sent the RUB/USD pair higher in forex trading this morning.
Thailand’s GDP grew by 2.3% year-over-year in the second quarter. This being higher than market expectations of a 2.1% rise lent support to the THB/USD forex pair.
Indonesia’s residential property prices rose by 1.76% year-over-year in the second quarter, after a 1.89% increase in the prior period, sending the IDR/USD pair higher in forex trading this morning.
Japan’s core machinery orders climbed by 2.1% to ¥876.1 billion in June, topping market projections of 1.1% and lending support to the JPY/USD forex pair.
New Zealand’s BusinessNZ Performance of Services Index climbed to 44.6 in July, from 40.7 in the previous month. This represented the first improvement in five months and sent the NZD/USD pair higher in forex trading this morning.
Spain’s balance of trade and consumer confidence, Turkey’s total motor vehicles production and total vehicle sales, US CB leading index, as well as Central Bank of Brazil’s focus market readout.
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