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BookmarkGold futures pulled back Tuesday from the 3 ½-month highs scored a day earlier, but the precious metal marked a second straight monthly gain
”Safety” demand recently lifted gold to its highest prices since November as concerns about geopolitics and President Donald Trump’s ability to enact economy-growing tax policies, and more, rise. Trump’s upcoming address to Congress late Tuesday fueled further uncertainty.
Moreover, the Federal Reserve’s lack of commitment to lift benchmark interest rates also helped to support higher prices in the precious metals of late. Fed chief Janet Yellen takes the microphone Friday.
Gold for April delivery GCJ7, -0.38% fell $4.90, or 0.4%, to settle at $1,253.90 an ounce—for a monthly gain of roughly 3.5% for a most-active futures contract. The contract settled at $1,258.80 on Monday—the highest finish since Nov. 10, according to FactSet Data.
“The growing uncertainty across the board and rising political risks have bolstered the appetite for safe-haven assets with gold back in fashion,” said Lukman Otunuga, research analyst at FXTM. “This yellow metal remains bullish on the daily charts, with further upside expected in the short term if the greenback continues to depreciate.”
On Tuesday, the ICE U.S. Dollar Index DXY, +0.19% fell 0.1%, though it’s set for a monthly gain of 1.5%. Commodities priced in dollars often trade inversely with the dollar, as moves in the U.S. unit can influence the attractiveness of those commodities to holders of other currencies.
“With investors maintaining a cautious approach ahead of Trump’s speech to Congress this evening, bulls may take advantage of the anxiety to elevate gold prices higher back above $1,260,” said Otunuga, in a note. Prices Tuesday touched an intraday high of $1,259, according to FactSet data.
Gold prices were little moved after a morning report showed growth in the U.S. economy in the final quarter was left at 1.9%. But prices for the metal pared some of their earlier losses as the U.S. dollar index headed toward session lows shortly after the release of data showing that consumer confidence rose to its highest level in 15 years.
Despite Tuesday’s gold pullback, many analysts see the metal at least holding a floor as financial markets await more details on tax-cutting plans, fiscal spending and more. They’re also waiting to see if the Fed delivers an anticipated rate increase over the next few meetings.
“Gold should reach $1,300 in the next few months,” said Adrienne Murphy, chief market analyst with AvaTrade. “Once it breaks this point, I’m bullish on the commodity. If the Fed does not raise rates in March, I see gold hitting this point within the month.”
The financial market is pricing in the probability of an interest-rate hike by the U.S. central bank in either March, May or June and that is “likely in the neighborhood of where we are heading,” said Dallas Fed President Rob Kaplan on CNBC Tuesday. The CME Group’s Fed funds futures pricing shows that traders see a 31% chance for a quarter-point rate increase in March.
Meanwhile, silver for May delivery SIK7, -0.67% tacked on 5.2 cents, or 0.3%, to $18.469 an ounce. Based on the most-active contracts, prices saw a 5.3% monthly gain.
May copper HGK7, +0.02% ended at $2.714 a pound, up 1.6 cents, or 0.6%. For the month, it was about 0.5% below the most-active contract settlement on Jan. 31.
April platinum PLJ7, -0.53% fell $7.90, or 0.8%, to $1,031 an ounce, with prices up about 3.5% for the month, while June palladium PAM7, +0.05% fell $13.30, or 1.7%, to $771.70 an ounce—up 2.3% for the month.
As for related ETFs, the exchange-traded fund SPDR Gold Trust GLD, -0.28% was nearly flat, trading around 3.1% higher for the month, while the iShares Silver ETF SLV, +0.58% was up 0.6%, ready for a monthly gain of 4.5%. The VanEck Vectors Gold Miners ETF GDX, -0.92% rose 0.2%, paring its monthly loss down to 4.4%.
Market Watch
By
Myra
P. Saefong
2/28/2017
