Gold price gets a lift from dollar weakness, stock shakiness

January 23, 2018

London (Jan 23)  Gold futures pushed higher Tuesday, finding traction against a dollar that hovered near three-year lows and early volatile swings for stock futures trading.

February gold GCG8, +0.36%  gained $5.20, or 0.4%, to $1,337.20 an ounce, pushing its month-to-date advance to roughly 2.2%. Among exchange-traded funds, the SPDR Gold Shares GLD, +0.18%  was up 0.3% premarket, while the VanEck Vectors Gold Miners GDX, +0.25%  gained 0.4%.

Gold futures were little changed on Monday as Congress voted to end the government shutdown, later signed by President Trump, easing any lingering uncertainty in the financial markets and helping stocks to a higher finish.

On Tuesday, the ICE U.S. Dollar Index DXY, +0.07%  , which measures the buck against a basket of six rivals, wavered between gains and losses near 90.3900. Gold, which is priced in dollars, often trades inversely with the dollar, as moves in the U.S. unit can influence the attractiveness of the precious metal to holders of other currencies.

U.S. stock futures reversed early gains, while Treasury yields TMUBMUSD10Y, -0.83%   slipped though remained above the closely watched 2.60% mark. Rising bond yields can dull the luster of gold, which offers no yield.

Some stabilization for gold had emerged after the metal dipped last week to snap a string of five weekly gains. On Thursday, gold dropped $12, or 0.9%, to settle at $1,327.20 an ounce, the biggest single-session dollar and percentage fall since Dec. 7, according to FactSet data. In the middle of last week, the contract had settled at its highest level since Sept. 8.

“Following the strong rally, a correction and subsequent rejection to the downside is probably what the market now needs to create the foundation required to push the price higher to and potentially beyond key resistance at $1,375/ounce,” said Ole Hansen, head of commodity strategy for Saxo Bank, in a quarterly outlook.

“Our bullish sentiment derives from the belief that inflation will receive increased attention as it moves higher, while geopolitical risks remain elevated with the market disliking the uncertainty created by the unpredictability of the U.S. president,” he said. “Investors are likely to continue to seek tail-end protection against the increased risk of a correction in other asset classes, particularly stocks and bonds but potentially also cryptocurrencies.”

And:  Gold rally brightens the outlook for mining stocks 

In other metals trading Monday, March silver SIH8, -0.08%  traded at $16.980 an ounce, down 0.1%. March copper HGH8, -1.86%  dropped 1.8% to $3.1405 a pound.

Saxo’s Hansen said copper futures move below support at $3.18 helped pushed the metal lower.

 April platinum PLJ8, -0.11%  fell 0.2% to $995 an ounce and March palladium PAH8, -0.73%  shed 0.7% to $1,084.70 an ounce.

Meanwhile, Swiss-based commodities fund Tiberius on Monday announced plans to launch the first digital coin —tcoin — pinned to industrial metals, such as copper and aluminum, Reuters reported. There are currently other digital coins backed by precious metals.


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