MW: Gold rallies, scores best settlement in over a week
Gold futures on Tuesday scored for their highest settlement in more than a week, up a third session in a row, as investors focused on the expectation that benchmark interest rates will be lower for longer.
December gold GCZ5, +0.35% climbed by $8.80, or 0.8%, to settle at $1,146.40 an ounce on Comex. That was the highest settlement for a most-active contract since Sept. 24. December silver SIZ5, -0.21% also picked up 27.6 cents, or 1.8%, to end at $15.984 an ounce.
Lackluster economic data, headlined by a weak jobs report last Friday, have provided some support for gold.
Gold gained more ground after a report early Tuesday showed that the U.S. trade deficit jumped almost 16% in August to $48.3 billion due to a relatively stronger dollar. The report may offer fodder for those forecasting a delay in a rate increase by the U.S. central bank.
“Sentiment towards gold has improved in the last fortnight,” said Julian Phillips, founder of and contributor to GoldForecaster.com. “The big change came last Friday, when the [U.S.] jobs number took away the optimism that interest rates would rise” this year, he said.
“The current perception is that the global economy is in decline and appears capable of pulling the U.S. economy down too,” he said. And “U.S. [gold] investors buy as a ‘contra’ to the dollar and the state of the U.S. economy, when they do buy.”
Gold also has benefited from a dollar that has slumped as predictions for a Fed rate hike shifts to sometime in 2016. The ICE U.S. dollar index DXY, -0.10% a measure of the greenback’s strength against a basket of six rival currencies, was down 0.6% in Tuesday trade.
But analysts at Capital Economics said gold hasn't performed as well as might have been expected, despite the expectations for a Fed rate “liftoff.”
Negative sentiment towards metals in general, as well as a lack of demand for gold as an inflation hedge are likely among the reasons gains for gold have been limited, Capital Economics analysts said in a note.
They don’t expect the headwinds to last, however, as economic improvements in China help other metals recover. Inflation expectations, as well, should rebound as oil prices CLX5, +1.52% pick up and labor markets continue to tighten, they said.
Among other metals traded on Comex, December copper HGZ5, +1.44% ended little changed at $2.355 a pound. January platinum PLF6, +1.21% tacked on $21.80, or 2.4%, to $934.70 an ounce and December palladium PAZ5, -0.35% rose $18.50, or 2.7%, to $707.70 an ounce.
