Gold prices ended around a three-week low Wednesday, on the back of a stronger dollar and a bounce for beaten-down equities, but month-to-date losses for benchmark U.S. stock indexes have helped to pull prices for the precious metal up in October.
U.S. economic data Wednesday mark “a return to risk-on equities,” with much stronger ADP October jobs’ numbers leading gold lower, said Jeff Wright, executive vice president of mineral exploration company GoldMining Inc.
ADP on Wednesday reported 227,000 new private-sector jobs in October, topping the 178,000 news jobs expected by economists polled by Econoday.
Against that backdrop, gold for December delivery GCZ8, +0.86% on Comex fell $10.30, or 0.8%, to $1,215 an ounce, notching its lowest settlement since Oct. 10, according to FactSet data.
For the month, however, prices trade roughly 1.6% higher, based on the most-active contracts, FactSet data show, representing the best month since July. The October advance comes after six monthly declines in a row.
December silver SIZ8, +0.79% fell 18 cents, or 1.2%, to $14.282 an ounce, notching the lowest finish since Sept. 18. The metal shed 2.9% for the month.
A firmer U.S. dollar, as well as a “noticeable recovery on the global stock markets are weighing on [the gold] price,” wrote analysts at Commerzbank in a Wednesday note. “Thus the technical picture has also become somewhat more gloomy again, which could make short-term-oriented investors more reluctant to bet on a rising gold price.”
The weakness saw gold fall below its 100-day moving average just below $1,220 an ounce, they noted. At the same time, memories of the mid-October pop higher by the metal means “it remains to be seen whether speculators will make any renewed attempts to short gold—at the time, many speculative investors were caught wrong-footed when the price suddenly surged,” forcing them to cover short positions and adding to the rally.
U.S. stock indexes moved higher on Wall Street after a strong Tuesday bounce that pushed the S&P 500 SPX, +1.09% and Dow Jones Industrial Average DJIA, +0.97% back into positive territory for 2018. Still, stocks have suffered a brutal and volatile October that is left the S&P 500 down 6.8% for the month.
The dollar edged up versus major rivals, leaving the ICE U.S. dollar index DXY, -0.39% up 0.2% at 97.16—trading up 0.8% so far this week and poised for a monthly rise of 2.1%. A stronger dollar can be a negative for commodities, making them more expensive to users of other currencies.
“The strength of the U.S. dollar is tied to anticipation the U.S. labor monthly jobs number on Friday will also be strong; and point towards faster interest rate increases from the FOMC into 2019,” said Wright.
He expects gold prices to hold at the $1,200 line, however, “given market volatility, potential for a partially split in U.S. government if Dems take the House of Rep[resentatives] and mixed U.S. equity earnings reports pointing towards a slower rate of economic growth in 2019.”
The SPDR Gold Shares ETF GLD, -0.56% was off 0.6% but on track for a 2% monthly rise. The iShares Silver Trust ETF SLV, -1.47% was off 1.3% and held a 2.2% month-to-date decline through Wednesday.
Also on Wednesday, December palladium PAZ8, +0.31% rose 1.3% to 1,068.50 an ounce after posting five straight sessions of losses, with a monthly loss of 0.4%. January platinum PLF9, +0.89% settled 0.5% higher at $843 an ounce, and notched a 2.5% gain in October. December copper HGZ8, +0.15% lost 0.2% to end at $2.659 a pound, and notched a monthly decline of 5.2%.
