Gold futures climbed Wednesday to tally a second straight session gain, finding support as the strength in the euro pressured the U.S. dollar, boosting the dollar-denominated metal’s appeal.
The move for gold came even as benchmark U.S stock indexes staged a recovery from a technology-inspired downturn that took the broader market to its lowest levels in weeks and the Nasdaq Composite /zigman2/quotes/210598365/realtime COMP +1.64% into correction territory.
“Gold and silver prices had been under some pressure of late, due among other things to concerns over a slower recovery in demand but mainly because of the rebound in the U.S. dollar,” said Fawad Razaqzada, market analyst at ThinkMarkets. “However, as bond yields have remained low, the selling pressure for gold and silver have not been too strong.”
“Investors remain hopeful that an effective vaccine will soon become available and convinced that, in any case, central banks and governments will be ready to provide more stimulus and debase their currencies,” he said in a market update. “Against this backdrop, gold and silver remain fundamentally supported.”
December gold /zigman2/quotes/210039572/delayed GCZ20 +0.21% /zigman2/quotes/210034565/delayed GC00 +0.21% rose $11.70, or 0.6%, to settle at $1,954.90 an ounce after trading as low as $1,926.30. Prices, which rose 0.5% rise on Tuesday, marked the highest most-active contract settlement since Sept. 1, according to FactSet data.
December silver /zigman2/quotes/210319381/delayed SIZ20 -0.04% /zigman2/quotes/210315219/delayed SI00 -0.04% , meanwhile, added 9 cents, or 0.3%, at $27.083 an ounce, following a 1% gain in the previous session.
The dollar weakened, as measured by the ICE U.S. Dollar Index /zigman2/quotes/210598269/delayed DXY -0.07% which fell by 0.2% to 93.275, as the euro /zigman2/quotes/210561242/realtime/sampled EURUSD +0.0428% rose toward session highs after Bloomberg News reported that some policymakers of the European Central Bank “have become more confident in their economic forecasts.” The story, citing sources familiar with the matter, comes ahead of the ECB decision on Thursday, when new staff forecasts are due.
“Expectations are growing among analysts that the ECB will provide a dovish assessment of the economy and in doing so trigger speculation that more QE would be on the way later in the year,” said Razaqzada. “If so, gold and silver should benefit on the back of potentially more weakness for European bond yields.”
Among other metals traded on Comex Wednesday, December copper /zigman2/quotes/210059538/delayed HGZ20 -0.20% tacked on 0.9% to $3.0515 a pound. October platinum rose 1.6% to $924.90 an ounce and December palladium /zigman2/quotes/214428583/delayed PAZ20 +0.85% edged up by 0.5% to $2,318.20 an ounce.