By Myra P. Saefong and Sarah Turner, MarketWatch
SAN FRANCISCO (MarketWatch) — Gold futures slipped Wednesday, pulling back after a sizable gain in the previous session, as a stronger dollar and a climb in U.S. equities lured some investors away from the precious metal.
Gold for February delivery GCG3 -0.38% traded down $4.60, or 0.3%, to $1,657.60 an ounce on the Comex division of the New York Mercantile Exchange.
The precious metal had jumped $15.90 an ounce, or 1%, to settle at $1,662.20 on Tuesday, amid signs of increased demand in Asia. Read: Gold futures score first gain in four sessions.
Overall, “as far as gold is concerned, the buy-side pressure is from investors who believe the rhetoric in the media concerning the prospect of [quantitative easing by the U.S. Federal Reserve] ] ending early is not credible,” said James West, portfolio adviser to the Midas Letter Opportunity Fund. So the buying continues for those investors “in defence of further U.S. dollar debasement as a result of quantitative easing.”
But “opposing that are those who do believe that quantitative easing will come to an end as the economy improves,” he said. That would likely provide a boost to the greenback, which tends to weigh on prices for dollar-denominated commodities such as gold.
Gold slipped Wednesday as the dollar DXY +0.37% pushed higher against the yen USDJPY +0.9080% after a short-lived corrective rebound that sent the Japanese currency higher. The euro EURUSD -0.2658% also fell against the dollar ahead of Thursday’s European Central Bank’s monthly policy meeting. Read:Japanese yen reverses rebound; dollar gains.
Also: 3 reasons the ECB won't cut...and 1 reason it might.
Investors also favored U.S. equities Wednesday, driving up the benchmark stock indexes after a two-day decline. See: U.S. stock indexes rise after two-day slide.
China demand
Some analysts see continued demand for gold from China providing support going forward.
“China’s gold production is rising as its imports are increasing. China is simultaneously the world’s largest importer and producer of gold in the world. This pace of demand is likely to support prices, we believe,” said metal strategists at HSBC.
Analysts at Commerzbank added that increased physical interest buying in Asia ahead of the expected hike in gold import duties in India and the run-up to the Chinese New Year festival is bolstering the price gain.
Across the wider metals complex, silver for delivery in March SIG3 -1.03% slid 22 cents, or 0.7%, to $30.25 an ounce, while March copper HGH3 +0.35% traded up 3 cents, or 0.9%, to $3.71 per pound.
April platinum PLJ3 -2.34% rose $5.30, or 0.4%, to trade at $1,588.50 an ounce, while March palladium PAH3 +2.19% PAH3 +2.19% PAH3 +2.19% added $12.35, or 1.9%, to $680.20 an ounce.
Myra Saefong is a MarketWatch reporter based in San Francisco. Follow her on Twitter @MktwSaefong.
Sarah Turner is MarketWatch's bureau chief in Sydney. Follow her on Twitter @SarahTurnerMKTW.
