Gold tilts higher as dollar faces selling pressure
Published: Sept 14, 2016 7:50 a.m. ET
By Rachel Koning Beals
Marketwatch News editor
December gold futures settled at $1,323.70 Tuesday, the lowest finish in nearly two weeks
Gold futures traded modestly higher Wednesday in an attempt to snap a multisession slide for the dollar-sensitive precious metal.
At last check, December gold GCZ6, -0.05% rose $1.60, or 0.1%, to $1,325.30 an ounce.
The yellow metal failed to hold on to early gains Tuesday and settled at $1,323.70, its lowest finish in nearly two weeks as a strengthening U.S. dollar again pressured gold. A broad index for the greenback on Wednesday ticked lower as global markets ready for key interest-rate meetings slated for next week.
December silver’s SIZ6, +0.18% rebound was more pronounced. The white metal rose 4 cents, or 0.2%, to $19.01 an ounce. The contract settled at $18.975 an ounce on Tuesday—also its lowest settlement since the start of this month.
The ICE U.S. Dollar Index DXY, +0.04% slipped 0.1%, while U.S. stock futures were tipping higher from their oil-fueled retreat in the previous session.
U.S. currency strength is typically a drag on dollar-pegged assets, including precious metals, leaving them relatively cheaper to buyers using other currencies. Gold and the dollar have defied their typically inverse relationship periodically over recent trading sessions, however.
The divergence between higher-leaning U.S. interest rates, which are dollar-supportive, and the skew toward lower rates in Japan and Europe continues to drive currency and precious metals trades. Prospects for higher interest rates is negative news for gold bulls as the metal, which doesn't pay interest, is typically more appealing in a low-rate environment.
“We expect speculation that the [Bank of Japan] will cut rates as early as at [its meeting September 20-21] to weigh further on the yen in coming days,” said Charalambos Pissouros, senior analyst at IronFX Global.
“On the other side of the Pacific, although the Federal Open Market Committee is very likely to stand pat, the dollar may remain supported by expectations that the meeting statement and [Fed Chairwoman Janet] Yellen’s press conference may have a ‘hawkish’ tilt,” he said.
But uncertainty for just what the Fed will say has cranked up market jitters. Fed Gov. Lael Brainard on Monday struck a dovish monetary policy tone, saying the central bank needed to be prudent in considering future rate rises. Brainard’s comments were the last from a Fed official ahead of the U.S. central bank’s own policy meeting on Sept. 20-21, a meeting that carries slim odds, but a chance, nonetheless, for a rate hike. Goldman Sachs this week trimmed September Fed move odds but lifted its expectations for a December rate tightening to 40% from 30%. Fed funds futures pricing put slightly higher odds on a December hike.
Meanwhile, among exchange-traded funds, the SPDR Gold Trust GLD, +0.27% was up 0.4% premarket. The iShares Silver Trust SLV, +0.45% rose 1.2%, while the VanEck Vectors Gold Miners GDX, +0.92% advanced 1.4%.
Back on Comex, December copper HGZ6, +1.62% rose 2 cents to $2.13 a pound, while October platinum PLV6, -0.09% gained $9.00, or 0.8%, to $1,045 an ounce. December palladium PAZ6, -0.32% traded at $661.65 an ounce, up $5.55, or 0.9%.
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