Gold futures settled higher on Thursday, building on gains from a day earlier as weakness in U.S. benchmark stock indexes and a drop in yields on government debt raised the precious metal’s investment appeal.
Gold concluded Thursday “on a positive note amid market caution and general risk aversion,” said Lukman Otunuga, senior research analyst at FXTM. “Tensions in Hong Kong, fading optimism over a US-China trade deal, and disappointing economic data from the second-largest economy in the world have dampened the market mood.”
“With risk appetite to diminish further on growing uncertainty, gold bulls are positioned to make a valiant return,” he told MarketWatch.
Gold for December delivery on Comex /zigman2/quotes/210039486/delayed GCZ19 +0.17% rose $10.10, or 0.7%, to settle at $1,473.40 an ounce, a day after snapping a four-day losing streak. December silver /zigman2/quotes/210319343/delayed SIZ19 +0.32% finished at $17.028 an ounce, up 11.5 cents, or 0.7%.
Gold extended its rally, with the climb on Wednesday proving that gold cannot be counted out due to a strong U.S. dollar and cannot be counted out by the Federal Reserve’s “present stance of holding pat with no changes that some view as hawkish,” said George Gero, managing director at RBC Wealth Management. Given that, “headwinds are now tail wings again.”
In the backdrop as the “usual worries” for investors, which can boost haven demand for gold, including U.S. politics, Brexit news and tariff talks with China, he added.
Appetite for traditional haven assets has grown amid renewed uncertainty over the outlook for a phase-one trade agreement between the U.S. and China.
Fawad Razaqzada, technical analyst at Forex.com, meanwhile, attributed the metal’s rise to a move higher in safe-haven government bonds, which has pushed yields lower. “This has helped to underpin low and non-interest-bearing assets such as the Swiss franc, Japanese yen and gold,” he said.
Also “equity markets in the U.S. seem to have stalled for the time being after repeatedly hitting new record highs,” he said in a note.
As gold futures settled Thursday, the yield on the 10-year U.S. Treasury note fell 6.1 basis points to 1.8092%. Yields fall as Treasury prices rise.
U.S. benchmark stock indexes traded lower on Wall Street after the Dow Jones Industrial Average /zigman2/quotes/210598065/realtime DJIA -0.05% and the S&P 500 /zigman2/quotes/210599714/realtime SPX +0.02% eked out record finishes on Wednesday.
The Wall Street Journal reported on Wednesday reported that U.S.-China talks had hit a snag over farm purchases, with Beijing reluctant to commit to a hard number in the text of the agreement. President Donald Trump has claimed China agreed to buy $50 billion of products a year. News reports have also highlighted a dispute over tariffs, with Beijing said to be insisting that existing tariffs be rolled back as part of an agreement while the White House has resisted.
In other metals trade, January platinum /zigman2/quotes/210262118/delayed PLF20 +2.53% rose by 0.9% to $882.80 an ounce, while December palladium /zigman2/quotes/210242071/delayed PAZ19 +0.97% was 1.6% higher at $1,702.10 an ounce.
December copper /zigman2/quotes/210059535/delayed HGZ19 +0.33% fell 0.7% lower to $2.6215 a pound. Prices have now declined for five sessions in a row as worries around U.S.-China trade have weighed on demand prospects for the industrial metal.