Gold settles higher on Wednesday
Gold futures settled higher on Wednesday, halting what had been a string of seven consecutive losses – the longest decline in two years.
“With optimism regarding a trade deal and Brexit fading, the risk-off mood has waned and has allowed a modicum of support to the precious metals,” analysts at Zaner Precious Metals wrote in a daily note.
April gold GCJ9, -0.15% rose $2.90, or 0.2%, to settle at $1,287.60 an ounce, recovering from a 0.2% loss the day before. Tuesday’s settlement at $1,284.70 marked the lowest since Jan. 24, based on the most-active contract, according to FactSet data. And the decline on Tuesday marked seven consecutive losses, the longest stretch of declines since the nine-session fall ended March 10, 2017, according to Dow Jones Market Data.
May silver SIK9, -0.46% lost 0.1% to $15.085 an ounce after ending flat a day earlier.
U.S. Secretary of State Mike Pompeo said in a recent interview that President Donald Trump would reject any trade deal with China that is not perfect. That “sent up a caution flag,” the Zaner analysts said—supporting haven gold.
Also, gold’s fall to a multiweek low Tuesday “didn’t usher in a sharp selloff, suggesting that the market had gotten a bit oversold on the reaction to the positive trade news over the past week, especially with an agreement not yet settled,” they said.
Meanwhile, the weakness of the US stock market has provided cover for a slight gold recovery, although the stable dollar, which has been trading for a higher week to date, is working to offset gold-supporting factors.
Meanwhile, the weakness of the US stock market has provided cover for a mild gold rebound, although the stable dollar, which has been trading for a higher week to date, is working to offset gold-supporting factors.
The dollar, as measured by the ICE U.S. Dollar DXY, +0.57% was nearly flat at 96.871 as gold futures settled, but up 0.4% for the week.
The fall in gold last week by 2.5% marks the sharpest weekly decline since August. The broad risk-on mood that boosted US and world stocks, as well as the strength of the US dollar, worked to dull the demand for this precious metal then and again this week.
Still, the status of gold is likely to see relative out-performance, as the late-cycle recession concerns remain, and several key central banks keep diversifying their reserve assets.
Traders will look to Friday’s monthly U.S. jobs data for hints on the Federal Reserve’s plans for interest rates. On Wednesday, New York Fed President John Williams said the central bank’s benchmark interest rate is “right at neutral”, a key official said Wednesday, signaling the Fed isn’t looking to raise interest rates imminently.
Among other metals, May copper HGK9, -0.22% settled at $2.919 a pound, down 0.5%. June palladium PAM9, -0.40% added 1.4% to $1,486.40 an ounce.
Platinum prices, however, led the losses among the Comex metals, with April platinum PLJ9, -1.33% down 1.2% at $828.10 an ounce.
“The platinum market received another fundamental blow from a report by the World Platinum Investment Council that called for largest platinum surplus since at least 2013,” said analysts at Zaner. “It expects an oversupply of 680,000 ounces in 2019, up from 645,000 in 2018. Consumption is expected to increase, but so is supply.”
“The market was in deficit as recently as 2016, but the falloff in diesel engine sales has reversed that,” the Zaner analysts said.