SYDNEY (MarketWatch) — Gold and silver futures edged up in electronic trading on Tuesday, while one strategist said a tightening of liquidity represents a “slight headwind” for commodity markets.
Gold for June delivery GCM11 +0.41% added $4.50 or 0.3% to $1,507.80 an ounce during Asian trading hours on the Comex division of the New York Mercantile Exchange.
Silver extended its rebound, with the July contract SIN11 +1.48% gaining 40 cents or 1.1% to $37.55 an ounce. The metal led the commodities’ rebound in Monday’s session, closing 5% higher.
Despite recent selloffs in metals, gold futures are trading 6.1% higher this year, while silver has gained 21.4%, according to data from FactSet.
“Liquidity in the market has been a driving force of commodity prices. Although QE is likely to come to end in the U.S., it is likely that we will still have ample liquidity around for some time to come. A lot of that liquidity has found its way into risky assets,” BNP Paribas chief metals strategist Stephen Briggs said at a briefing in Sydney.
“Generally speaking the liquidity will be slowly reduced over the coming months. If that is going to be gradually withdrawn, it may represent a slight headwind over the coming year,” Briggs said
The U.S. dollar index DXY +0.29% , which measures the greenback against a basket of six major currencies, advanced to 74.963 Tuesday, from 74.690 late Monday.
“On a year’s view, the dollar will start strengthening again. Dollar weakness [has been] a positive push for dollar-priced commodities. That is going to be another slight headwind,” Briggs said.
The broader metals complex was mixed in electronic trading Tuesday, with copper for July delivery HGN11 +0.80% adding 3 cents or 0.9% to $4.05 a pound.
Sister metals platinum and palladium were weaker, with the July platinum contract PLN11 +0.15% falling $2.20 or 0.1% to $1,792.90 an ounce, while palladium for June delivery lost 90 cents or 0.1%, to $728.10 an ounce.
Virginia Harrison is a MarketWatch reporter based in Sydney.
