Gold climbs, heads toward 4-day win streak

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January 30, 2019 11:17am NYSE:GLD

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From Myra P. Saefong: Gold futures marched higher on Wednesday, attempting to stretch their win streak to the longest in a month as commodity traders awaited an update on the Federal Reserve’s monetary policy strategy later in the day.

For now, there are “enough worldly worries–trade, tariffs, U.S. politics, Venezuela, and recession fears” and the upcoming Fed policy decision to “keep gold steady and appeal to asset allocators now that the prices are firmly over 1,300,” said George Gero, managing director at RBC Wealth Management.

The most-actively traded contract on Comex, April gold GCJ9, +0.11% traded 60 cents, or 0.05%, higher at $1,315.80 an ounce, while the contract for February delivery GCG9, +0.15%  rose $1, or less than 0.1%, at $1,309.90 an ounce.

Tracking the most-active contracts, futures prices were poised for their highest settlement since May 14, according to Dow Jones Market Data. The April contract, meanwhile, was on track for its highest finish since mid-June. The commodity also was looking at a fourth straight gain, which would extend its lengthiest winning streak since Dec. 28.

The Fed’s two-day policy meeting concludes later Wednesday, with an updated policy statement to be released at 2 p.m. Eastern Time, a half-hour after metals settle on Comex. At 2:30 p.m., Fed Chairman Jerome Powell will hold a news conference to discuss the central bank’s pace of rate increases and continued plans for unwinding its asset portfolio, both factors that could influence trade in precious metals.

Thus far, policy makers have signaled patience in normalizing monetary policy, amid a market that has viewed recent tactical moves by the Fed as too aggressive. A slackened pace of rate increases can be bullish for gold because a moderated pace of increases to yields helps to support gold, which doesn’t deliver a yield of its own.

Moreover, slack in policy normalization tends to translate to a softer U.S. dollarDXY, +0.06% A weaker dollar can bolster bullion buying by making gold less costly for buyers using other monetary units.

“We see the Fed decision later today as a potential major bearish development for the dollar which in turn would be a significant bullish development for gold and silver prices,” analysts at Zaner Precious Metals wrote in a daily note.

“In our opinion, the Fed should acknowledge the vast amount of global slowing evidence, the obvious drag from the U.S. government shutdown and the unresolved U.S./Chinese trade war,” they said. “It is possible that the Fed might utter some hawkish words regarding ongoing strength in the U.S. jobs market but if that strength is found to be fading, the Dollar index could quickly fall below 95.00. A decline below 95.00 in the Dollar index could project an April gold rally up above $1,335.00.”

“On the other hand, the April gold contract from last week’s lows has already rallied roughly $36 an ounce and the FOMC result could prompt significant price volatility,” the analysts added.

Following ADP data Wednesday showing that companies in the U.S. added a larger-than-expected 213,000 jobs in January, gold futures edged up and then pulled back. Monthly nonfarm payrolls data are due out Friday and they don’t always track ADP’s results.

Other metals futures traded higher, with March copper leading HGH9, +1.72% the way and trading up 1.5% at $2.767 a pound. April platinum PLJ9, +0.40% added 0.2% to $817.20 an ounce, while March palladium PAH9, +0.73%  rose 0.5% to $1,310.10 an ounce.

Among exchange-traded funds, SPDR Gold Shares GLD, -0.01%  fell less than 0.1%, while the VanEck Vectors Gold Miners GDX, -0.59%  traded 0.3% lower.

The SPDR Gold Shares (GLD) was trading at $123.99 per share on Wednesday morning, up $0.01 (+0.01%). Year-to-date, GLD has gained 0.27%, versus a -0.35% 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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