By Myra P. Saefong and Joseph Adinolfi
Gold futures climbed Wednesday to post their highest finish in nearly a week, supported by weakness in the dollar and a drop in U.S. Treasury yields, as “nervous” traders boost haven buying of the metal ahead of the month’s end.
Gold futures /zigman2/quotes/210039517/delayed GCZ22 -0.20% for December delivery rose $33.80, or 2.1%, to settle at $1,670 per ounce on Comex after trading as low as $1,622.20. That was the highest most-active contract finish since Sept. 22, FactSet data show.
December silver /zigman2/quotes/210319410/delayed SIZ22 +0.55% tacked on 54 cents, or 3%, at $18.88 per ounce.
Palladium futures /zigman2/quotes/229904593/delayed PAZ22 +0.05% for December were up $78.70, or 3.8%, to $2,169.10 per ounce, while the most-active January platinum contract /zigman2/quotes/230581331/delayed PLF23 +0.35% climbed by $21.10, or 2.5%, at $860.80 per ounce.
December copper /zigman2/quotes/210059544/delayed HGZ22 +0.32% tacked on 8 cents, or 2.3%, at $3.3585 per pound.
Gold prices climbed Wednesday on “safe-haven buying amid a very nervous marketplace, as the calendar is set to turn to what can be a tumultuous month of October for stock and financial markets,” said Jim Wyckoff, senior analyst at Kitco.com, in daily commentary.
“Traders and investors are keeping a very close eye on the currency markets,” he said, though gold prices did drop to a nearly two-and-a-half-year low overnight.
Gold currently trades higher for the week, but prices are still on track to post losses for the month, as well as the quarter.
Precious metals analysts have largely blamed rising bond yields and the rampaging U.S. dollar for diminishing gold’s allure as a haven asset.
However, gold prices welcomed the Bank of England’s “dramatic intervention that avoided an imminent gilts crash and sent global bond yields sharply lower,” said Edward Moya, senior market analyst at OANDA, in a market update.
“This was somewhat expected and serves as a reminder that gold will do just fine once the global bond market selloff is truly over,” he said.
The BoE said it would buy long-dated U.K. government bonds to restore order and “the purchases will be carried out on whatever scale is necessary to effect this outcome.”
The ICE U.S. Dollar Index /zigman2/quotes/210598269/delayed DXY +0.05% , a gauge of the dollar’s strength against a basket of rivals, was down 1.2% to 112.76. The yield on the 10-year Treasury /zigman2/quotes/211347051/realtime BX:TMUBMUSD10Y +0.92% fell to 3.84% from 3.963% on Tuesday.
Gold continues to get “kicked around by the dollar,” said Adrian Ash, director of research at BullionVault.
However, Wednesday’s rebound for gold “highlights just how almighty the U.S. currency has become this month,” he told MarketWatch. Gold reversed this week’s drop for far in the dollar on Wednesday, but hit three-week highs in euro terms, he said.
Ash also said gold’s rebound also follows a sharp retreat in bond yields, “driven by the Bank of England suddenly joining a raft of Asian central banks in intervening in the markets.”
“The fact that major-economy policymakers are trying to stem and reverse market action shows how worried they are about an uncontrolled crash,” he said. “Gold is finding a decent bid amid all this uncertainty.”