MW: Gold looks to log first gain in three sessions
Gold futures edged higher on Wednesday, finding support after posting losses over the past two trading sessions.
“The correction of the last couple of days has run its course, and gold is resuming the upswing that started back in July,” said Colin Cieszynski, chief market strategist at CMC Markets.
December gold GCZ5, +0.49% gained $6, or 0.5%, to $1,130.80 an ounce on Comex, while December silver SIZ5, +0.43% tacked on 8.4 cents, or 0.6%, to $14.84 an ounce. On Tuesday, gold settled 0.7% lower, with traders focused on expectations that the Federal Reserve will raise interest rates this year.
“The Fed has delayed interest rate liftoff and even when they do start raising rates…the pace of increases will be a lot slower than the 10-plus straight increases we had [in the] last cycle,” said Cieszynski.
Meanwhile, “the soft China news keeps some central banks on their heels, but this could be offset by the less dovish-than-expected” comments from the European Central Banks’s President Mario Draghi, he said.
The preliminary Caixin China Manufacturing Purchasing Managers’ Index, a gauge of nationwide manufacturing activity, fell to 47.0 in September, compared with a final reading of 47.3 in August. The reading was the lowest since March 2009.
Data also released Wednesday show that the preliminary U.S. Markit manufacturing index was unchanged at 53.0 last month.
“Traders and pundits are still focused on the Fed’s will-they-won’t-they quarter point hike, but [Wednesday’s] bad Chinese data fit exactly” with Fed Chairwoman Janet Yellen’s key excuse for delaying a rate hike last week, said Adrian Ash, head of research at BullionVault.
Thursday’s speech from Yellen “could spark another round of Fed speculation,” which could impact both the U.S. dollar and gold, said Cieszynski.
Riskier assets like U.S. stocks have lost ground this week, with the S&P 500 SPX, -0.15% down 0.8% as of Tuesday’s close, leading analysts to predict that gold should score gains on haven demand.
“With other markets looking more stressed, gold may well start to shine again,” said William Adams, head of research at FastMarkets, in a note Wednesday.
Among other metals traded on Comex, December copper HGZ5, +0.50% added 1.1 cents, or 0.5%, to $2.308 a pound. October platinum PLV5, -0.53% lost $4.10, or 0.4%, to $933.40 an ounce, but December palladium PAZ5, +6.30% rose $28.75, or 4.7%, to $639.70 an ounce.
