Metals Stocks: Gold futures move higher as dollar, stocks and yields retreat

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Gold futures moved higher on Wednesday, finding support from weakness in the U.S. dollar and a retreat in Treasury yields as global stocks slip, amid rising geopolitical tensions.

Prices for the yellow metal touched a high at $1,800 in Wednesday dealings, but has held ground below that key level since.

“Gold prices are struggling to stay above the 1,800-price mark, an important price point that boosts the confidence among gold bulls,” said Naeem Aslam, chief market analyst at AvaTrade, in a market update.

Still, “demand for physical gold continues to increase,” with China’s net gold imports up by 60% during last month, he said. “The number was at the highest level in nearly five months, and this means that the second-biggest economy of the world is more interested in buying gold, which should continue to help the prices in the long run.” 

December gold
GCZ21,
+0.16%

 
GC00,
+0.16%

rose $2.70, or 0.2%, at $1,796.10 an ounce, following a 0.7% fall on Tuesday. Silver futures for December delivery
SIZ21,
+0.69%

SI00,
+0.69%

was also up 16.2 cents, or 0.7%, at $24.255 an ounce.

Some modest buying was being seen in precious metals as U.S.-China tensions were seen flaring up. China’s biggest telecom operator, China Telecom, was being blocked from doing business in the U.S., after the  U.S. Federal Communications Commission voted Monday to revoke and terminate a unit of the Chinese company, citing  “significant national security and law enforcement risks.”

Against that backdrop, the 10-year Treasury yield
TMUBMUSD10Y,
1.571%

was down to around 1.567%, the U.S. dollar was 0.2% lower, as measured by the ICE U.S. Dollar Index
DXY,
-0.16%
.

Weakness in the U.S. dollar and the lower yields are usually supportive for gold, which recently drifted up to around the $1,800 for the first time in six weeks as concerns about out-of-control inflation helped to boost bullion values.

Tuesday’s pullback for gold was blamed on profit taking, but Wyckoff on Tuesday suggested that conditions supportive for gold, including uncertainty about the economic outlook due to COVID-19, remain in place to at least keep declines for the precious metal in check.

In U.S. economic reports, a reading of durable-goods orders for September fell 0.4%, less than estimates for a 1% decline. “Core” durable goods order, excluding items like aircrafts, climbed 0.8% in September.

In other metals trading, December copper
HGZ21,
-1.84%

lost 2.1% to $4.39 a pound.

“The trend in copper is still bullish as futures trade just off multi-month highs,” analysts at Sevens Report Research wrote in Wednesday’s newsletter. “However, it will likely take a bullish demand-side catalyst from economic data to support a rally towards $5.00, which would be a new record high.”

“Bottom line, whether it is driven by supply concerns, the strong market action in copper is an encouraging macro signal,” they said.

Rounding out action on Comex, January platinum
PLF22,
-1.14%

shed 1.2% to $1,021 an ounce and December palladium
PAZ21,
-1.74%

traded at $1,973 an ounce, down 1.6%.

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