Gold price tilts up, eyes best levels in about a week
New York (Oct 6) Gold futures were tipping higher on Tuesday and eyeing a third day of gains as the precious metal shrugs off a recent rally in global stock markets to focus on the expectation that benchmark interest rates will be lower for longer.
December gold futures GCZ5, +0.91% were $6.10, or 0.5%, higher at $1,143.70 an ounce, after posting a second session of gains Monday. December silver SIZ5, +1.86% picked up 4 cents, or 0.3%, to trade at $15.75 an ounce.
Lackluster economic data, headlined by a weak jobs report last Friday, has provided some support for gold to trade modestly higher.
Gold gains gathered steam in early Tuesday trade after a report showed that the U.S. trade deficit jumped almost 16% in August to $48.3 billion due to a relatively stronger dollar. The report may offer fodder for those forecasting a delay in a rate increase by the U.S. central bank.
Gold has garnered some haven bids at a time marked by uncertainty about global economic growth and the view that the Federal Reserve will keep interest rates at or near zero.
Gold also has benefited from a dollar that has slumped as predictions for a Fed rate hike shifts to sometime in 2016. The ICE U.S. dollar index DXY, -0.38% a measure of the greenback’s strength against a basket of six rival currencies, was down 0.2% in early trade Tuesday.
After two sessions of solid gains, stock trading looked more subdued Tuesday, which could add to gold appetite.
“The precious metal is therefore displaying some bullish [characteristics] and may be able to extend its gains further if the dollar and to a lesser degree stocks retreat from their current levels this week,” said Fawad Razaqzada, analyst at Forex.com in a Tuesday research note.
However, Razaqzada said the lack of global inflation and lackluster physical demand, could be impediments for gold. “For these reasons I remain [skeptical] about whether this latest bounce will transform into a sustained rally,” he said.
Source: MarketWatch
