Myra P. Saefong and Mark DeCambre
Gold futures ended higher for second straight session on Wednesday, with bullion buoyed by the revival of talks on a new U.S. coronavirus relief package, even as a rise in Treasury yields looks to offset the metal’s price gains.
Bullish buyers have also made the case that physical gold tends to be bought during the holiday period between November and December which is helping to buck up prices in recent trade.
On Wednesday, prices for the precious metal were also supported by “the prospect of further U.S. fiscal stimulus and further global monetary support,” said analysts at ICICI Bank, in a note.
The U.S. House Majority Leader, Steny Hoyer, said Wednesday he hopes to see a deal on another coronavirus fiscal stimulus package worked out in principle as soon as this weekend.
February gold /zigman2/quotes/210035429/delayed GCG21 -0.12% /zigman2/quotes/210035429/delayed GCG21 -0.12% climbed by $11.30, or 0.6%, to settle at $1,830.20 an ounce, the highest for a most-active contract since Nov. 23, FactSet data show. Prices for the metal surged 2.1% on Tuesday and marked its biggest one-day climb in three weeks. Prices on Monday had touched their lowest settlement since July 1.
“Gold’s seasonality flip from a typically negative November to positive December/January seems to have turned fashionable pretty quickly, with the 2.5% move higher in December already locked in the books,” said Stephen Innes, chief global markets strategist at Axi, in a market update.
Gold prices briefly added slightly to the day’s move up after a reading from Automatic Data Processing showed a rise of 307,000 U.S. private-sector jobs in November, below forecast for 420,000 jobs, according to economists average estimates surveyed by Econoday.
Gold’s more than 2% rise on Tuesday came as the U.S. dollar sank to its lowest level in about three years.
“Gold finally found its footing as a steep drop in the dollar and firming inflation outlook overshadowed surging bond yields,” resulting in a rally on Tuesday, said analysts in the latest newsletter for Sevens Report Research.
“We had expected gold to extend its recent decline towards $1,750, and it still may, but the longer-term outlook for gold remains bullish given the supportive fundamental backdrop of a downward trending dollar and rising inflation expectations,” they said.
On Wednesday, the dollar fell 0.2% to 91.147 as measured by the ICE U.S. Dollar Index DXY . A softer dollar can make gold which is priced in dollars more attractive to buyers using other monetary units.
Commodity traders also are paying attention to U.S. government bond yields, which have been rising, because they can undercut appetite for gold and other precious metals that don’t offer a coupon.
Meanwhile, March silver /zigman2/quotes/211961204/delayed SIH21 -0.14% fell by a penny, or 0.04%, at $24.08 an ounce, after jumping 6.6% in the prior session.
January platinum /zigman2/quotes/214899298/delayed PLF21 -0.62% added 0.8% to $1,012.10 an ounce, while March palladium /zigman2/quotes/215784886/delayed PAH21 -0.17% fell by 0.9% to $2,408.20 an ounce.