Gold futures prices headed toward a third straight advance Thursday, with the metal’s haven status attracting buying as a sharp retreat for U.S. stocks spread to global markets.
Gold gained, with U.S. stock futures pointing to more red on Wall Street to start a new session, and with the dollar, a key driver for the precious metals, also lower. Another haven market, however, U.S. Treasury bonds — chief among culprits influencing rickety stock trading of late — drew their own fresh demand Thursday, halting for now the rise in yields that spooked stock investors. Bond prices and yields move inversely.
December gold GCZ8, +1.58% jumped $13.50, or 1.1%, to $1,207 an ounce, on track for the strongest finish in over a week. December silver SIZ8, +1.49% rose 8 cents, or 0.6%, to $14.405 an ounce.
“The safe haven metal had hardly responded to recent stock market sell-off, as investors found better yields in the fixed income markets. But now that the dollar and yields have eased back, gold is finding some solid support, especially given that the stock markets are selling off,” said Fawad Razaqzada, market analyst with Forex.com.
“The metal could extend its gains further should it finally crack that $1205-$1215 resistance range,” he said.
Because precious metals — often used as a haven by investors — don’t offer a yield, the commodity is vulnerable to a slump in a rising-rate environment. That climate also tends to lift the dollar, dimming the appeal of U.S.-priced gold to investors using other currencies. But stock markets are also vulnerable to rising bond yields and gold’s fortunes have been tethered to record-setting equities for much of this year.
The ICE U.S. dollar index DXY, -0.47% was down 0.3% at 95.16, though it remains nearly 4% higher this year so far, contributing to a roughly 9% drop for gold over the same stretch. The yield on the U.S. 10-year Treasury note TMUBMUSD10Y, +0.03% fell nearly 6 basis points to 3.158%.
Rising rates, reflected both in Federal Reserve policy and the bond market’s reflection of that policy, have been the major catalyst across financial markets. The Fed has already increased rates three times in 2018 and is expected to lift benchmark rates a fourth time in December, as well as continue its gradual tightening trend in 2019, according to the Fed’s own forecasts. Fed action drew fresh criticism from a campaigning President Trump Wednesday night.