Gold price rebounds, looks to snap skid at three sessions, as dollar dips

October 4, 2017

London (Oct 4)  Gold prices gained Wednesday, snapping a string of three-straight session declines that had been driven by the trio of record-high stock levels, relative strength for the dollar and the multiyear high for select Treasury yields.

December gold on Comex GCZ7, +0.67%  was up $7.40 , or 0.6%, to $1,282.20 an ounce. It settled at $1,274.60 an ounce Tuesday, the lowest level since Aug. 8. The exchange-traded SPDR Gold Shares ETF GLD, +0.05% meanwhile, traded up 0.7% premarket.

December silver SIZ7, +1.17%  rose 19 cents, or 1.1%, to $16.84 an ounce, while the silver ETF iShares Silver Trust SLV, +0.26% rose 1.1% premarket.

Short-term Treasury yields TMUBMUSD02Y, -0.54%    fell but remained near 10-year highs. Higher bond yields, which move inversely to prices, can make owning gold, which doesn’t offer interest, less appealing.

The Dollar Index DXY, -0.33%  was down 0.3%. Gold and the dollar typically move inversely. From its 12-month peak on Sept. 8, gold has lost roughly 6.5%, dropping at its fastest pace compared to the move in the dollar since December 2016’s sharp correction.

“We have been bullish gold for most of 2016/17,” analysts at Bank of America Merrill Lynch said in a weekly metals commentary. “Yet, the hawkish Fed in a non-inflationary environment has increased headwinds to the yellow metal meaningfully. Hence, we believe the upside is limited near-term. Investors may also reduce their exposure on a potentially stronger U.S. dollar.”

Meanwhile, U.S. stocks, notably the Dow Jones Industrial Average DJIA, +0.37%  and the S&P 500 index, looked primed to pause at record highs in Wednesday trading. Much of the enthusiasm around equities has been driven by optimism that Trump’s administration will implement tax policies, including tax cuts and repatriation of money held abroad, that could boost appetite for riskier assets and away from gold.


Silver Phoenix Twitter                 Silver Phoenix on Facebook