Gold prices edge higher on US stock market pause

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April 24, 2019 1:01pm NYSE:GLD

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From Myra P. Saefong: Gold prices inched higher on Wednesday as a rally in stocks that took two of the three main U.S. equity indexes to records cooled, providing support for the haven metal.

However, a perky dollar — hovering around its highest level in about 22 months— capped the metal’s gains.

Gold for June delivery GCM9, +0.37%  rose $1, or less than 0.1%, at $1,274.20 an ounce. The most-active contract settled at its lowest levels since about Dec. 26 a day earlier, according to FactSet data. The yellow metal has declined in five of the past six sessions.

Metals have been under pressure as stocks have mounted a steady climb to records since a selloff late last year, with the S&P 500 index SPX, -0.05%  and the Nasdaq Composite Index COMP, -0.01% registering all-time peaks for the first time in months on Tuesday. However, equities headed mostly lower in Wednesday dealings.

Meanwhile, the ICE U.S. Dollar Index DXY, +0.37% a key gauge of the greenback against six major rivals, was up 0.1% at 97.766, near its highest since June 2017. A stronger U.S. unit can make buying the buck-pegged commodity comparatively more expensive for investors using other currencies.

“With the dollar churning higher and rates holding the most-recent rebound (back to the pre-March Fed meeting levels), the bullish case for gold has weakened significantly,” said analysts in the latest Sevens Report. “Near term, further declines can be expected as the [fourth quarter 2018] rally unwinds. But on a longer time frame, nothing has changed as gold has been pinned in a trading range between roughly $1,150 and $1,350 since 2016.”

The bout of weakness in gold has made some assets pegged to the precious asset appear more attractive, one market technician said. “Gold stocks are starting to look appealing again after sharp drops down to areas of technical support. This area has some appeal from a countertrend perspective,” wrote Mark Newton, technical analyst and founder of Newton Advisors.

The SPDR Gold Shares exchange-traded fund GLD, +0.29%  edged down less than 0.1%, while the miner-focused VanEck Vectors Gold Miners ETF GDX, +0.67% lost 0.2%.

“This area near 20.50 looks important, and GDX has also shown some evidence of downside exhaustion after moving lower for the last 8 of 9 sessions,” Newton said in a Wednesday note.

Among other metals, May silver SIK9, +0.91%  added 3.4 cents, or 0.2%, to $14.825 an ounce, while May copper HGK9, +0.45%  picked up 0.4% to $2.906 a pound. July platinum PLN9, -0.53%  edged 0.6% lower to $888.10 an ounce, while June palladium PAM9, +2.00%  was up 1.8% at $1,400.90 an ounce.

The SPDR Gold Shares (GLD) was trading at $120.46 per share on Wednesday afternoon, up $0.34 (+0.28%). Year-to-date, GLD has declined -2.58%, versus a 10.14% 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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