Gold prices climb, nearing $1,300

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January 7, 2019 11:56am NYSE:GDX NYSE:GLD


From Myra P. Saefong and Mark DeCambre: Gold futures headed higher on Monday, poised to rebound from their worst single-session drop in two weeks, with prices getting a boost as downbeat U.S. ISM nonmanufacturing data pressured the dollar.

February gold on Comex GCG9, +0.28%  gained $5.90, or 0.5%, at $1,291.70 an ounce, following a 0.7% fall on Friday, its largest daily drop since Dec. 21, according to FactSet data. For the week, gold futures rose about 0.2%, following gains in each of the last two weeks.

March silver SIH9, -0.39% meanwhile, shed 1.1 cents, or less than 0.1%, at $15.775 an ounce, after gold’s sister metal fell 0.1% to end last week, with prices producing a weekly gain of about 2.3%.

Some strategists maintain a bullish outlook for bullion, and other precious metals, on the back of expectations for continued volatility in global markets that have whipsawed so-called risk assets, highlighted by choppy trade in the Dow Jones Industrial Average DJIA, +0.54% and the S&P 500 index SPX, +0.79% in the past several months.

“Gold is trying to continue its climb, after a few hours of weakness on Friday. The main trend remains bullish, even though the resistance of $1,300 still seems out of reach for now,” wrote Carlo Alberto De Casa, chief analyst, at brokerage ActivTrades, in a Monday research note.

On Friday, appetite for havens receded sharply after labor market data showed that the U.S. created a better-than-expected 312,000 new jobs in December to bring total employment gains in 2018 to a three-year high of 2.64 million. The unemployment rate ticked up to 3.9% as labor participation rose. Economists polled by MarketWatch had expected a gain of 182,000 nonfarm jobs.

The upbeat data also came as Federal Reserve Chairman Jerome Powell emphasized that the central bank intended to take a path toward normalizing interest-rate policy that wouldn’t ignore signs of disruptions to financial stability as rates rose.

Powell’s remarks suggested to some that the Fed may hike rates at a more measured pace, news that may provide long-term support for gold which tends to see weakened investment appetite when interest rates are competitively richer. Gold doesn’t offer a yield.

Softness in the U.S. dollar also offered a runway for gold to rise. A weaker dollar can make assets pegged to the currency more appealing to buyer using other monetary units. One measure of the buck, the ICE U.S. Dollar Index DXY, -0.40%was off 0.5% at 95.721 as data Monday showed that service-oriented U.S. firms grew in December at the slowest pace since midsummer.

The nonmanufacturing index issued by the Institute for Supply Management fell to 57.6 last month from 60.7 in November.

Against that backdrop, March copper HGH9, +0.08%  fell by 0.2% to $2.642 a pound. April PLJ9, -0.15%  traded at $830.30 an ounce, up 0.4%. March palladiumPAH9, -0.29%  added less than 0.1%, to $1,235 an ounce after settling Friday at a record on Comex.

Read: Palladium hits another record, inches closer to the price of gold

Among exchange-traded funds, the SPDR Gold Shares GLD, +0.23%  rose 0.5%, the iShares Silver Trust SLV, -0.14%  also gained 0.2%, and the miner-oriented VanEck Vectors Gold Miners ETF GDX, -0.92%  added less than 0.1%.

The SPDR Gold Shares (GLD) was trading at $121.73 per share on Monday morning, up $0.29 (+0.24%). Year-to-date, GLD has declined -1.55%, versus a -4.45% 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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