Gold prices jump to a 10-month high

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February 19, 2019 12:25pm NYSE:GLD

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From Myra P. Saefong & Rachel Koning Baels: Gold futures firmed Tuesday, looking to log their highest finish since April, as the stock market assumed a defensive stance ahead of the next round of talks in the U.S.-China trade spat.

Financial markets await the latest trade developments, as discussions resume Tuesday in Washington. A 90-day tariff truce between the parties is set to end at the start of March. President Trump on Sunday tweeted about the trade talks, saying “Big progress being made on soooo many different fronts!”

April gold GCJ9, +1.39% gained $16.40, or 1.2%, at $1,338.50 an ounce after the contract settled at a two-week high of $1,322.10 Friday, enough to flip the contract to positive for last week despite a string of losses before Friday. A settlement around the current level would be the highest since April of last year, FactSet data show. U.S. markets were closed Monday for the Presidents Day holiday.

“The uncertainty of the trade talks and fears that the U.S. equity market may be running out of steam is creating capital flows into a more protective allocation,” said Peter Hug, global trading director at Kitco Metals Inc.

“The issue with Brexit, which comes to a fore in 5 weeks, has the potential to derail the entire continent, and dealers across the pond are seeing increased physical demand for gold,” he said in a daily note. Traders will also look at the minutes from the Federal Reserve’s January meeting due out Wednesday “to again analyze the Fed’s confirmation of a dovish posture moving forward.”

Gold, typically bought as a haven asset in times of political uncertainty, has seen largely subdued daily moves. Still, Trump’s declaration of a national emergency at the end of last week to pay for a wall along the U.S.-Mexico border prompted sixteen states filed a federal lawsuit on Monday challenging the declaration. That may be offering some have support for gold, said analysts at Zaner Precious Metals.

U.S. benchmark stock indexes edged up in Tuesday dealings, and bond demand pushed down yields.

“Further weakness in government bond yields could underpin the lower-yielding and noninterest-bearing assets such as gold and silver even more profoundly going forward, although equities cannot ignore a deteriorating global economy for too much longer,” said Fawad Razaqzada, market analyst at

Precious metals tend to draw buying in a low interest-rate climate. Rising rates make nonyielding gold less attractive to investors who will chase higher yields elsewhere.

The dollar, as measured by the ICE U.S. Dollar Index DXY, -0.12% was trading 0.2% lower at 96.713. Weakness in the buck can make purchasing dollar-priced assets comparatively less expensive for those using other monetary units.

Among other metals, March silver SIH9, +1.19% rose 14.7 cents, or 0.9%, to $15.89 an ounce. March copper HGH9, +2.57%  added 2.3% to $2.864 a pound. April platinum PLJ9, +1.72%  rose 1.5% to $818.70 an ounce.

March palladium PAH9, +3.01%  jumped 3.4%, continuing to probe fresh record highs based on FactSet data going back to November 1984. The most-active contract was up 2.6% for last week. Prices for the metal have been climbing to new highs for months now, buoyed by rising demand, particularly from the auto sector, and tight supplies.

The SPDR Gold Shares (GLD) was trading at $126.36 per share on Tuesday afternoon, up $1.56 (+1.25%). Year-to-date, GLD has gained 2.19%, versus a 4.62% 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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