Gold heads higher for a second session as the dollar index declines

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December 4, 2018 12:32pm NYSE:GLD

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From Myra P. Saefong: Gold futures headed higher for a second session on Tuesday, as a weaker dollar helped set prices up for their highest in more than a month.


“With the dollar facing multiple headwinds in the form of falling U.S. Treasury yields and a Fed that seems to be adopting a dovish tone, this is all good news for zero-yielding gold,” said Lukman Otunuga, research analyst at FXTM, in a daily update. The appreciation in gold prices “continues to highlight how the yellow metal remains primarily influenced by the dollar’s performance.”

Prices also gained on Monday, as an apparent cease-fire in the trade skirmish between the U.S. and China softened the buck, which has been the de facto haven amid tariff conflagrations between the world’s largest economies.

“The key outside markets today find the U.S. dollar index solidly lower,” said Jim Wyckoff, senior analyst with Kitco.com. “The U.S.-China trade truce has boosted the world’s secondary currency markets early this week, which in turn is pressuring the greenback.”

Gold for February delivery GCG9, +0.26%  was up $4.70, or 0.4%, at $1,244.30 an ounce. A settlement around this level would be the highest for the contract since Nov. 1, FactSet data show. March silver SIH9, +0.70%  tacked on 19.1 cents, or 1.3% to $14.69 an ounce.

The ICE U.S. Dollar Index DXY, +0.12% was down 0.2% at 96.841. A weaker dollar typically boosts investment demand for dollar-priced commodities, like gold.

“The U.S.-China trade truce has boosted the world’s secondary currency markets early this week, which in turn is pressuring the greenback,” said Jim Wyckoff, senior analyst with Kitco.com.

Gains for risky assets, including the U.S. stock market, came at the week’s start after President Trump and Chinese President Xi Jinping approved a pact on Saturday offering a 90-day moratorium between Beijing and Washington on tariff tension, just as a planned increase in duties to 25% from 10% was scheduled for Jan. 1 on $200 billion in Chinese goods exports to the U.S.

However, Wall Street’s mood has cooled Tuesday, amid doubts of a lasting trade pact between the two economic giants. Chinese and U.S. statements around the intent are different.

Those uncertainties also have lifted buying for haven gold.

Later in the week, job-market data and its potential impact on the scope for coming interest-rate policy, takes center stage.

Read: What President George H.W. Bush’s day of mourning means for stock, bond and commodity traders

In other metals trading, palladium looked to notch another record settlement amid ongoing worries linked to tighter supplies and growing demand. March palladium PAH9, +1.59% rose 1.5% to $1,183 an ounce.

January platinum PLF9, -1.25%  fell by 0.9% to $803.10 an ounce and March copper HGH9, -1.94%  shed 0.9% to $2.785 a pound.

Among exchange-traded funds, SPDR Gold Shares GLD, +0.52%  climbed by 0.6%.


The SPDR Gold Shares (GLD) was trading at $116.96 per share on Tuesday afternoon, up $0.55 (+0.47%). Year-to-date, GLD has declined -5.41%, versus a 3.47% rise in the benchmark S&P 500 index during the same period.

GLD currently has an ETF Daily News SMART Grade of B (Buy), and is ranked #1 of 35 ETFs in the Precious Metals ETFs category.


This article is brought to you courtesy of MarketWatch.


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