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Gold futures marked a second consecutive gain Thursday after the European Central Bank cut eurozone interest rates and delivered a batch of measures intended to boost the region’s sluggish economy — bullish moves for bullion.
The ECB cut its deposit rate further into negative territory, decreasing it by 10 basis points to negative 0.5%, while also announcing it would restart its monthly bond-buying program as it attempts to juice inflation and European expansion.
“Gold certainly welcomed the ECB stimulus,” said Craig Erlam, a senior market analyst at Oanda. “Ultimately, global easing like we’re seeing now has been bullish for gold and that’s exactly what we’re seeing right now.”
December gold /zigman2/quotes/210039486/delayed GCZ19 -0.15% on Comex gained $4.20 an ounce, or 0.3%, to settle at $1,507.40 an ounce after rising by 0.3% Wednesday. Silver for December delivery /zigman2/quotes/210319343/delayed SIZ19 -0.24% , meanwhile, added nearly a penny, or 0.04%, at $18.177 an ounce, after giving up less than 0.1% a day ago.
“Central banks around the world have been easing, and will continue to do so, and that’s why gold has been making such strides higher with only modest corrections along the way,” Erlam said in a market update.
Still, gold futures finished well below the session’s high of $1,532.20 as U.S. bond yields turned higher, dulling demand for gold, which doesn’t offer a yield.
Expectations that the U.S. Federal Reserve may be influenced by the ECB had contributed to a fall in bond yields earlier in Thursday’s session. The 10-year Treasury note yield /zigman2/quotes/211347051/realtime BX:TMUBMUSD10Y -0.79% was last up 4.4 basis points to 1.7795% Thursday from 1.733% late Wednesday.
Gold’s pull back from the day’s highs is also “related to U.S.-China developments and uncertainty,” said Jeff Wright, executive vice president of GoldMining Inc.
President Donald Trump said late Wednesday that the U.S. would delay implementing fresh tariffs until Oct. 15 on $250 billion in China goods that were due to take effect on Oct. 1.
Trump’s action was taken by the market as a reflection of softening tariff tensions amid the Sino-American trade clash and comes ahead of a new round of negotiations between the world’s superpowers to resolve the conflict that is set to take place at an unspecified date in early October.
“The tariff delay would be incrementally positive for trade negotiations and negative for gold; but other aspects are unclear,” said Wright.
“Attention is now shifting to the FOMC meetings and the statement as to whether further cuts are coming and this will shift the gold market one way or the other,” he added.
The Fed’s monetary policy gathering will be held next week. The central bank is widely expected to cut U.S. interest rates by 25 basis points on Sept. 18.
Reductions to global interest rates and some $17 trillion dollars in government debt that offers a negative yield have helped to bolster appetite for alternatives assets like gold, considered a haven during times of economic uncertainty.
Other metals traded on Comex settled higher. December copper /zigman2/quotes/210059535/delayed HGZ19 -0.06% added 2.6 cents, or 1%, to $2.6405 a pound and October platinum /zigman2/quotes/210263819/delayed PLV19 -0.60% finished at $952.60 an ounce, up $12.40, or 1.3%.
Palladium futures settled at a record above $1,600 an ounce, according to Dow Jones Market Data. The metal’s most-active December contract /zigman2/quotes/210242071/delayed PAZ19 -0.0058% settled up $48, or 3.1%, at $1,604.80 an ounce.