Gold futures edged higher on Tuesday, giving up their initial losses, to trade back above $1,700 an ounce for the first time in about a month, boosted by a decline in the US dollar and gains Treasury bond yields.
Investors also await the release of October US consumer price inflation data on Thursday, which will likely help guide the Federal Reserve’s next decision on monetary policy.
Price action
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Gold contract for December delivery
GCZ22,
+ 2.27% raised $34.50, or 2.1%, to trade at $1,715 per ounce on Comex. FactSet data shows that the price for a best performing contract has not exceeded $1,700 since Oct.
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December Silver
SIZ22,
+ 3.54% rose 67.6 cents, or 3.2%, at $21,595 an ounce.
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December Palladium
PAZ22,
+ 1.50% added $18, or 1%, to $1,915.50 per ounce, while January platinum
PLF23,
+ 2.44% up $20.70, or 2.1%, to $1,010.10 an ounce.
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Dong for January
HGZ22,
+ 2.57% delivery rose 8.7 cents, or 2.4%, to $3.69 per pound.
What’s going on
Gold and silver futures edged higher on Tuesday, initiating an initial decline, as the US dollar fell and Treasury yields weakened.
US Dollar Index ICE
DXY,
fell 0.5% at 109.569 as US voters headed to the polls to cast their ballots in Tuesday’s midterm elections, while Yields on 10-year Treasury notes
TMUBMUSD10Y,
down nearly 7 points to 4.141%.
See: According to Morgan Stanley’s Wilson, what the midterm election results mean for the stock market’s recovery
The weakening of the dollar makes goods priced in this unit less expensive for users of other currencies. Meanwhile, lower yields reduce the opportunity cost of holding valueless gold relative to government bonds.
Chintan Karnani, research director at Insignia Consultants in New Delhi, attributed the rise in gold prices to a weakening dollar, as well as “technical buying” as gold tries to trade above its 50-day moving average. According to FactSet data, the 50-day moving average for December gold is $1,680.99.
Karnani told MarketWatch that gold also has short-term coverage as prices break through $1,700.
December gold is currently “facing resistance” at the 100-day moving average, he said. FactSet pegged the 100-day moving average at $1,731.16.
A closely watched report on October inflation will be released on Thursday, with economists expect the consumer price index calculated by prices increased by 7.9% over the same period last year.
