Gold futures prices firmed Friday, aiming for back-to-back session gains and limiting losses for the week, as global market jitters sparked by German financial giant Deutsche Bank boosted the haven appeal of the precious metal.
"Considering how much media attention this topic has attracted over the past few days, we consider it likely that this risk-off environment continues for a while, as investors re-price the rising probability of a banking crisis in the eurozone, or even another large-scale economic crisis," said Charalambos Pissouros, senior analyst at IronFX Global, in a note.
December gold rose $ 5, or 0.4%, to $ 1,331 an ounce. Gold rallied late Thursday to end at $ 1,326 an ounce after tapping earlier lows under $ 1,320. Prices had tallied losses of roughly 1.6% over the previous two trading sessions. The contract is on pace to end the week down about 0.4%. It should finish September up just over 1% and will end the third quarter up around a slim 0.4%.
Attention turned away from the interest-rate watch to broader financial market performance. European stocks fell in the wake of the latest news from the financial sector, while U.S. stocks indicate a lower open.
Shares of Deutsche Bank traded briefly under 10 euros, their lowest level on record, as global markets got their first chance to react to reports that some of Deutsche Bank's biggest clients have been pulling out funds.
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The bank, run by CEO John Cryan, has seen its cost of borrowing climb amid questions about its ability to pay a potential $ 14 billion fine from the U.S. Justice Department. That prompted a deepening debate about whether the government should step in to help the bank or risk deeper financial market ripples.
"This could keep safe-haven assets supported and may extend the losses in riskier assets, though much will depend on the incoming news around this story and whether or not DB is seen as being in need of state intervention in order to remain solvent," Pissouros said.
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Gold gained even as the dollar rose against most currencies, save for the Swiss franc and others that are also generally considered as risk-off hideouts. The ICE U.S. Dollar Index was up 0.2% as markets looked to recent and upcoming commentary from Federal Reserve officials for clues on the pace of interest-rate increases.
Higher interest rates can boost the dollar and dull demand for dollar-denominated commodities, including gold. That means gold and the dollar often move inversely.
Fed remarks so far this week have mostly pointed to a December U.S. rate increase but some disagreement persists.
Friday's U.S. economic lineup includes data on income and spending, consumer sentiment and an inflation reading. Reaction to the data, not expected to change expectations for a gradual Fed adjustment higher to ultra-low interest rates, could be overshadowed by the Deutsche Bank developments. See the economic calendar.
Silver for December delivery added 16 cents, or 0.8%, to $ 19.35 an ounce.
The SPDR Gold Trust ETF was up 0.4% premarket, iShares Silver Trust rose 1.3%, while the VanEck Vectors Gold Miners ETF rose 1%.
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