MW: Gold pushes higher after data, Draghi bond talk
Metals futures move broadly higher, paced by palladium
By Barbara Kollmeyer, MarketWatch
MADRID (MarketWatch) — Gold prices moved higher Thursday, as general nervousness amid economic data and central bank meetings pushed investors toward the metal.
Extending earlier gains, gold for December delivery GCZ2 +0.74% jumped $15.80, or 0.9%, to $1,795.50 an ounce on the Comex division of the New York Mercantile Exchange. On Wednesday, gold gained $4.20 to settle at $1,779.80.
What’s going on with gold is a “buildup” of information coming out at the moment, said Austin Kiddle, director at Sharps Pixley.
U.S. data showed initial jobless claims rose to 367,000 last week, slightly below expectations, while the Commerce Department said factory orders fell 5.2% in August.
Economists polled by MarketWatch had anticipated a 5.9% drop after the collapse a share decrease in durable-goods orders the government had already reported. Excluding transportation, new orders rose 0.7%.
Next up for the market will be the release of minutes of the September meeting of the Federal Open Market Committee, the Federal Reserve’s policy-setting arm. The minutes are due at 2 p.m. Eastern. See: 5 things to watch in the Fed minutes of Sept. meeting.
That all comes ahead of key U.S. nonfarm-payrolls data for September due Friday—the economic highlight of the week for gold, equities and other assets.
Also Thursday, the European Central Bank held steady on record-low interest rates. At a press conference, ECB chief Mario Draghi said he expected growth in the euro zone to remain weak, with the economy only expected to recover “gradually.” He also said the bond-buying plan announced last month helped ease tensions in the markets. See: ECB's Draghi says bond-buy plan easing tensions.
Separately, the Bank of England held steady on interest rates and asset purchases on Thursday.
The ICE dollar index DXY -0.54% , which measures the greenback against a basket of six other major currencies, fell to 79.469 from 79.956 in North American trade late Wednesday. The dollar’s pullback in turn underpinned U.S. stocks. Read about Thursday's trading in U.S. stocks.
Against a backdrop of “nervousness” in the market, “little bits of information are having a much bigger impact, especially along the lines of the U.S. dollar going up and gold going up at the moment too. It’s just simply people being a bit nervous about what was going on,” said Kiddle.
Investors had been moving into gold ahead of Thursday’s central bank meetings, just in case of any moves made on rates, he said.
“There are a lot of people out there talking of financial Armageddon and even with seemingly neutral announcements, this can make investors prepare for the worst,” Kiddle said.
Monetary-policy easing over the past few months has acted as a support for gold as investors view it as the ultimate store of value. Gold strengthens when investors fear inflation and currency weakening.
Breaking through key technical barrier
The $1,780-an-ounce level “was an important number to breach and with the U.S. dollar rising due to recent positive data, it has given gold a strong headwind instead of the normal inverse-relationship that gold and the dollar normally have,” said Kiddle. “We shall be watching the upcoming U.S. data closely to see if this holds true.”
Also supportive for gold, said Kiddle, is the fact that the Hindu festival of Diwali is fast approaching. What marks a key time for precious metals buying in India could help push gold to the key level of $1,800 an ounce, he said.
Among other metals Thursday, December silver futures SIZ2 +0.66% rose 31 cents, or 0.9%, to $35 an ounce, while December copper HGZ2 -0.04% gained 1 cent, or 0.2%, to $3.79 a pound.
December palladium PAZ2 +1.86% rose $14.05, or 2.1%, to $671.95 an ounce, and January platinum futures PLF3 +1.25% added $23.10, or 1.4%, to $1,717.20 an ounce.
Mining strikes have been supportive for metals such as platinum. In South Africa, nearly 20% of the nation’s miners are striking, which is affecting some of the biggest gold and platinum mining companies in that country. Striking spread to the iron-ore sector on Wednesday.
Barbara Kollmeyer is an editor for MarketWatch in Madrid.
