Gold books a gain as dollar tumbles versus yen

Gold books a gain as dollar tumbles versus yen

Gold prices finished sharply higher Thursday, coinciding with a meltdown for the U.S. dollar against the yen, and fresh signals that the Federal Reserve is taking a cautious approach to future interest-rate hikes.

June gold GCM6, +1.52% closed up $13.70, or 1.1%, to $1,237.50 an ounce, after closing on Wednesday down $5.80, or 0.5%, to $1,223.80 an ounce. The metal is on track to log a gain of 1.5% — its best weekly gain since the week ended March 4, according to FactSet data.

The buck’s weakness against the yen highlighted an aversion to risky assets that gripped global markets Thursday, pushing the Dow Jones Industrial Average DJIA, -0.98% to a drop of more than 200 points.

“Heightened global risks are clearly being attributed greater weight than the stronger U.S. economy. This makes gold attractive,” said analysts at Commerzbank, in a note to clients. The yen tends to rise during times of global-market turmoil.

Gold’s climb follows Wednesday’s release of minutes from the Federal Open Market Committee’s March meeting, which affirmed reluctance by the Fed to lift interest rates at their next meeting April 26-27. Those minutes were released about 30 minutes after gold settled on Comex in New York on Wednesday.

Higher rates generally diminish the attractiveness of precious metals, which offer no yield.

“The FOMC conveyed a sense that there’s no harmony among the Fed policy makers and the view,” said Fawad Razaqzada, technical analyst at Forex.com and City Index. He said that dynamic is bullish for gold prices and unsettling for stock-market investors.

Read: Dead wrong: Osama bin Laden bet that gold was going to $3,000

The dollar USDJPY, +0.01% plunged to a 17-month low against the Japanese yen, trading as low as ¥107.69 on the day, sharply below where it was trading in New York late Wednesday, at around ¥109.79.

The SPDR Gold Trust GLD, -0.02% was up 1.3%. Market Vectors Gold Miners ETF GDX, +3.13% soared 3.4%.

Silver rose in step with gold, with the May contract SIK6, +1.10% up 10.4 cents, or 0.7%, to close at $15.158 an ounce.

Elsewhere on Comex, May copper HGK6, -3.10% fell 6.7 cents, or 3.1%, to close at $2.0765 a pound; July platinum PLN6, +1.53% rose $10, or 1.1%, to $954.70 an ounce; while June palladium PAM6, -0.46% lost $4.15, or 0.8%, to finish at $533.80 an ounce.

Published: Apr 7, 2016 4:12 p.m. ET