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Gold settles higher, records weekly gains

Monday, September 18, 2023

Today’s headlines

What’s happening: Gold prices closed higher on Friday, recording a gain for the week.

What happened: The safe-haven metal had plunged to a three-week low last week on strength in the US dollar.

A decline in the US dollar index on Friday lent support to gold on the last trading session of the week.

Why it matters: Although the US released higher-than-expected inflation data last week, it was not alarmingly high. This reduced speculations of an immediate action by the Federal Reserve on interest rates.

The latest inflation report was impacted by higher gasoline prices. The producer price index for final demand increased by 0.7% in August, the most in over one year. The figure also came in higher than market expectations of 0.4% growth.

After surging to its strongest level in six months, the US dollar took a breather on Friday, which lent support to the safe-haven metal. Weakness in the US dollar generally makes commodities and metals cheaper for investors holding foreign currencies and boosts their demand.

The Fed is all set to announce its monetary policy decision on Wednesday, with markets expecting the US central bank to keep rates unchanged.

Gold for December delivery gained $13.40 to close at $1,946.20 an ounce on Friday, while silver for December delivery added 40 cents to $23.39 an ounce. December copper declined 2 cents to settle at $3.80 a pound.

What to watch: Markets will watch this week’s FOMC meeting, as a hawkish or dovish tone from the Fed could result in big moves in gold. Traders will also continue monitoring the movement of the US dollar.

The markets today

The Canadian dollar will be in focus today ahead of a basket of major economic reports

Context: The CAD/USD forex pair weakened slightly on Friday, but recorded gains for the week.

Details: Investors focused mainly on Canada’s domestic inflation data, while oil prices also moved higher, which provided a boost to the loonie last week.

Manufacturing sales in Canada rose 1.6% in July, versus a preliminary estimate of a 0.7% increase. However, this was an improvement over the 2% decline a month ago. Net foreign investment in Canadian securities grew by C$11.62 billion in July, versus C$12.61 billion a month earlier.

The price of crude oil, one of Canada’s major exports, gained 0.6% to close at $90.77 per barrel on Friday, hitting a ten-month high amid concerns over tightening supply following production cuts by Saudi Arabia.

The Federal Open Market Committee is widely expected to hold rates in the 5.25%-5.50% range on Wednesday.

The CAD/USD forex pair edged lower by 0.1% to 1.3515 on Friday. Despite this, the pair recorded the biggest weekly gain since June. The S&P/TSX Composite index rose 0.26% to close at 20,622.34 on Friday, recording gains for the fifth session, and adding around 2.4% for the week.

What to watch: Investors await the release of economic reports on housing starts, raw materials prices and producer price inflation from Canada today. Housing starts in Canada, which fell by 10% to 254,966 units in July, is expected to decline further to 241,000 units in August. Analysts expect commodity prices in Canada to fall by 5.5% year-over-year in August, following an 11.1% decline in July. Industrial producer prices in Canada, which increased by 0.4% in July, are expected to rise by 0.5% in August.

Other Markets: US trading indices closed lower on Friday, with the Dow Jones index, S&P 500 and Nasdaq 100 down by 0.83%, 1.22% and 1.75%, respectively.

The news shaping the markets

Ukrainian authorities said that Kyiv had recaptured the eastern village of Klishchiivka, which Russia occupied in January. The news sent the safe-haven US dollar index slightly lower this morning.


Singapore’s non-oil domestic exports declined by 20.1% year-over-year in August. The figure coming in worse than market expectations of a 15.8% decline exerted pressure on the SGD/USD forex pair.


New Zealand’s BusinessNZ Performance of services index declined to 47.1 in August, from 47.8 in the prior month. Despite this, the NZD/USD pair moved slightly higher in forex trading this morning.


Columbia’s manufacturing production plunged by 7.2% year-over-year in July, versus a 4.8% decline in the previous month, exerting pressure on the COP/USD forex pair.


Ireland’s BNP Paribas Real Estate construction PMI fell to 44.9 in August, from 45.6 in July. However, the EUR/USD pair moved slightly higher in forex trading this morning.

What else to watch today

Brazil’s IBC-Br index of economic activity and Central Bank of Brazil focus market readout, Mexico’s consumer spending and GDP aggregate demand, as well as US NAHB/Wells Fargo housing market index, net long-term TIC flows, Net treasury international capital flows and net purchases of US treasury bonds and notes.


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