Gold futures top $1,140 to settle at 15-week high
New York (Feb 3) Gold futures rallied Wednesday to their highest settlement level in more than 3 months as a drop in the U.S. ISM services index weighed on the dollar, lifting the yellow metal’s investment appeal.
April gold GCJ6, +1.40% climbed $14.10, or 1.3%, to trade at $1,141.30 an ounce. Prices, which finished modestly lower on Tuesday, settled at their highest level since Oct. 30.
Gold found support from “increased concerns about the economic outlook after the weaker-than-expected ISM data showed a slowdown in the services sector in January,” said Mark O’Byrne, research director at GoldCore. This would suggest the Federal Reserve “will be more likely to put interest rates on hold.”
The Fed hiked interest rates in December for the first time in nine years, but held them steady after its policy meeting last week as it looks to economic and financial developments to determine its next move. Higher rates can boost the dollar DXY, -1.43% and make gold metal less competitive against interest-bearing investments.
On Wednesday, however, a retreat in the ICE U.S. dollar index DXY, -1.43% after news that the ISM services index dropped to its lowest level since February 2014, provided support for dollar-denominated gold.
Wednesday’s higher settlement for the metal also came as U.S. equities traded lower, but despite gains in oil prices CLH6, +9.61%
“If volatility continues in the stock markets, we can expect to see a safety bid in gold as investors look for someplace to put the proceeds from what they eject from the equity positions in their portfolios,” said Adam Koos, president of Libertas Wealth Management Group.
Gold had seen some modest losses lower early Wednesday after a report on U.S. private-sector hiring topped expectations, but showed a slowdown in the pace of hiring.
Traders continue to await the latest monthly data on U.S. employment, due Friday. Economists polled by MarketWatch forecast unemployment holding steady at 5% and jobs gains in January at 180,000.
“The Fed is largely in the watch and wait mode, and any rebellious economic condition will push their hand to make a U-turn on their current policy,” said Naeem Aslam, chief market analyst at AvaTrade.
Meanwhile, March silver SIH6, +2.84% climbed 44.5 cents, or 3.1%, to $14.734 an ounce. March high-grade copper HGH6, +2.17% added 4 cents, or 2%, to $2.095 a pound.
April platinum PLJ6, +2.98% ended $24.40, or 2.9% higher, at $880.10 an ounce, while March palladium PAH6, +3.86% added $24.25, or 4.9%, to $515.55 an ounce.
Source: MarketWatch
