Gold futures tallied a fifth straight gain on Wednesday as investors continued to buy the safe haven asset, even though securities seen as risky also gained altitude on the back a slowdown in the spread of China’s coronavirus.
“I believe retail investors are pouring into equities, while institutional investors are a little more cautious and seeking safe haven exposure,” said Jeff Wright, executive vice president of GoldMining Inc.
Gold for April delivery on Comex rose $8.20, or 0.5%, to settle at $1,611.80 an ounce after surging 1.1% on Tuesday. Prices for the most-active contract marked the highest settlement since March 21, 2013, according to FactSet data.
In electronic trading, April gold briefly edged up, then fell from the Wednesday’s settlement. It was at $1,610.50 an ounce shortly after minutes from the rate-setting U.S. Federal Open Market Committee’s January meeting were released. The meeting notes showed that Fed officials believe the U.S. economy seemed stronger in late January than they had expected.
Still, gold prices have managed to climb so far this week, despite some factors that should weigh on the metal. Prices have been supported by comparatively weaker government bond yields and a Federal Reserve that has kept interest rates low, analysts said.
“There are many theories as to why gold has suddenly seen such a bullish impulse with coronavirus risk certainly one of them, but the yellow metal is also benefiting from more fundamental factors such as the fact that for the first time in more than a decade central banks have been net buyers,” said Boris Schlossberg, managing director of FX Strategy, in emailed commentary. “But perhaps the single greatest reason for [gold’s] strength is that real interest rates are negative and continue to progressively remain so.”
The benchmark 10-year Treasury note yield /zigman2/quotes/211347051/realtime BX:TMUBMUSD10Y +11.05% was at 1.561%, up modestly Wednesday, but down for the week. Low yields can make precious metals, which don’t offer a coupon, more attractive to investors.
Gold briefly pared gains after U.S. economic data published early Wednesday.
The U.S. producer-price index jumped 0.5% last month, the largest gain since the fall of 2018. Economists polled by MarketWatch had predicted a 0.2% advance. And a report on housing showed that builders started construction on new homes in the U.S. at a pace of 1.57 million in January, the Commerce Department said Wednesday , representing a 3.6% decrease from a revised 1.63 million in December, but was 21.4% higher than a year ago.
Among other metals, March silver picked up 16.1 cents, or 0.9%, to end at $18.311 an ounce, extending its climb to its highest finish since early January of this year.
March copper edged up by less than 0.1% to $2.606 a pound. April platinum added 1.1% to $1,004.50 an ounce, with prices for the most-active contract logging its highest finish since Jan. 24, FactSet data show.
March palladium added nearly 3% to $2,571.20 an ounce, extending its climb to fresh records.
While many doubt the largest palladium supply deficit projections will be realized “due to softer Chinese auto catalyst inspired [platinum group metals] demand, it is possible that the explosion in prices will result in physical palladium supply being hoarded by investors,” analyst at Zaner Metals wrote in a daily note. That, in turn, “could effectively result in a lack of available supply for industrial uses.”