Gold pushes higher as investors focus on US-China trade talks, Fed minutes

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February 20, 2019 2:20pm NYSE:GLD

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From Myra P. Saefong & William Watts: Gold futures crept higher Wednesday, with bulls looking to optimism over U.S.-China trade talks to extend a rally that saw the yellow metal end at a 10-month high a day earlier.

The metal “continues up move within hailing distance of $1,350,” which is a “technical bullish signal,” said George Gero, managing director at RBC Wealth Management.

There are “many good reasons for recent price improvements,” among which is a retreat in the dollar, he said in a daily note. Worries about a global slowdown, Brexit concerns and now U.S.-China trade talks and U.S. politics are “all extra reasons for investors to seek another haven such as gold.”

Gold for April delivery on Comex GCJ9, +0.10%  rose $2.30, or 0.2%, to trade at $1,347.10 an ounce after touching a high of $1,349.80. The most-active contract rose 1.7% on Tuesday to post the highest close for a most-active contract since April 19, according to FactSet data.

March silver SIH9, +1.05%  was up 9.3 cents, or 0.6%, at $16.06 an ounce, following a 1.4% rise Tuesday.

Analysts tied gold’s strength to upbeat expectations about U.S.-China trade talks that resumed in Washington this week after high-level discussions last week in Beijing. A deal on trade would be positive for the outlook for emerging markets, to gold’s benefit, analysts said.

“While primarily seen as a safe haven, gold is highly exposed to the emerging markets, which make up more than half of its global demand,” said Carsten Menke, commodities research analyst at Julius Baer, in a note.

“An improving economic backdrop in the emerging markets and strengthening local currencies versus the U.S. dollar bode well for gold demand. This is particularly true for China, where gold demand had been lackluster for the past few years as consumers became increasingly concerned about the outlook for the economy,” he said. “Easing trade tensions with the United States would likely alleviate some of these concerns and could provide some support to domestic gold demand.”

Investors will also be paying attention to the minutes of the Federal Reserve’s January meeting, which are due for release at 2 p.m. Eastern — after gold futures settle for the session. The Fed surprised markets late last month when it abruptly put future rate moves on hold.

Meanwhile, palladium futures continued to explore record territory after closing at an all-time high on Tuesday. March palladium PAH9, +0.72%  added $6.10, or 0.4%, to $1,460 an ounce. Palladium has been on a tear thanks to rising demand from the auto sector and tight supplies.

Sister metal April platinum PLJ9, +1.44%  rose $9.50, or 1.2%, to $830.60 an ounce.

March copper HGH9, +1.69%  was up 4 cents, or 1.4%, to $2.914 a pound–set for the highest finish since early July. Year to date, it has climbed by more than 10%.

“Copper has been resilient due to optimism that trade war talks will be successful,” said Scott Gecas, chief market strategist at Walsh Trading. A “positive outcome is viewed as a positive for global trade.”

Still, with the global outlook for growth hinting at a slowdown, the outlook for copper “will all come down to future economic data releases,” he said.

Among exchange-traded funds, SPDR Gold Shares GLD, +0.02%  climbed by 0.3% and the iShares Silver Trust SLV, +0.73%  rose 0.4%.

The SPDR Gold Shares (GLD) was trading at $126.97 per share on Wednesday afternoon, up $0.27 (+0.21%). Year-to-date, GLD has gained 2.68%, versus a 4.74% 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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