Gold futures settled higher Wednesday, a day after the precious metal lost its grip on the psychologically significant $1,500 mark amid gains in stocks, yields and a firmer U.S. dollar — all headwinds for the commodity.
On Wednesday, some of those factors moderated somewhat, with bond yields sharply lower and the dollar a bit weaker.
Gold prices fell Tuesday “as cascading sell stops from overbought conditions triggered lows to below $1485,” said George Gero, managing director at RBC Wealth Management. Prices have seen some recovery Wednesday, but traders were “wary” of moves in the stock market, as they eye the latest U.S. economic data and global economic headlines, he said in a daily note.
Gero sees gold as “range bound” in the $1,485 to $1,525 area, and said “large dips present buying opportunities for longer-term investors.”
December gold GCZ19, +0.55% on Comex rose $9.40, or 0.6%, to settle at $1,493.10 an ounce, recouping less than half of what it lost a day earlier. Prices declined by 1.8% Tuesday to settle at the lowest level for a most-active contract since Oct. 15 and notching the biggest one-day dollar and percentage decline since Sept. 30, according to FactSet data. Tuesday’s dip marked the first time in four sessions that the metal finished below $1,500, a level seen by technical analysts as a dividing line between bearish and bullish sentiment
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December silver SIZ19, +0.04%, meanwhile, tacked on 3 cents, or 0.2%, at $17.598 an ounce, following a 2.8% slide that dragged gold’s sister metal to a two-week low.
“With bond prices falling and yields on the rise, investors are evidently reducing their expectations over aggressive rate cuts from global central banks,” so recent weakness in gold makes some sense, wrote Fawad Razaqzada, technical analyst at Forex.com, in a Wednesday research report.
He said, however, that gold hasn’t entirely lost its luster, even if further weakness in price are expected.
“While further short-term falls look somewhat more likely than it did a couple of weeks ago, the longer-term outlook remains positive for gold,” the Forex.com analyst said.
“One has to remember that China is a big consumer of the precious metal. The prospects of a trade deal therefore boosts the physical demand outlook for gold both directly, and indirectly via a stronger yuan,” he wrote.
Recent reports have indicated that U.S. and Chinese officials were actively considering rolling back some tariffs to complete the partial trade agreement.
Gains for gold picked up slightly on Wednesday after a weaker-than-expected report the productivity of American workers. Productivity declined at a 0.3% annual rate from July to September, the government said Wednesday, marking the first decline in four years. Productivity fell a somewhat smaller 0.1% among American manufacturers.
The U.S. dollar, as measured by the ICE U.S. Dollar Index DXY, -0.02%, was down nearly 0.1% after a 0.4% gain a day earlier, while the 10-year Treasury yield TMUBMUSD10Y, -2.57%, which falls as prices rise, was at 1.8081% from 1.865% late Tuesday.
A weaker dollar and lower yields can make gold and precious metals comparatively more attractive to commodity investors.
Among other metals, December copper HGZ19, -1.20% fell 1.3% to $2.665 a pound, following a rise of 1.1% Tuesday. January platinum PLF20, +0.21% tacked on 0.1% to $931.70 an ounce, while December palladium PAZ19, +1.02% settled at $1,761.10 an ounce, up 0.8%.