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Home>UPDATE: Gold prices waver after 2-session decline

UPDATE: Gold prices waver after 2-session decline

UPDATE: Gold prices waver after 2-session decline

10/03/2017

By Myra P. Saefong and Mark DeCambre, MarketWatch

Dollar index steadies, bond yields ease back

Gold prices wavered Tuesday between small losses and gains after posting declines in each of the past two sessions.

Treasury yields eased back after recent strength dulled some of gold's luster, but assets considered risky, such as U.S. equities, continued to lure some investors from so-called haven assets.

December gold on Comex was up 90 cents, or less than 0.1%, to $1,276.70 an ounce, after settling at the lowest level since Aug. 8 in the prior session.

U.S. government bond yields got a boost off increased expectations that Federal Reserve Chairwoman Janet Yellen and fellow policy makers are inclined to lift interest rates once more before the end of 2017. The 2-year Treasury yield note , the most sensitive to shifting interest-rate expectations, hit a 52-week high (http://www.marketwatch.com/story/treasury-yields-see-muted-action-after-better-than-expected-manufacturing-data-2017-10-02) on Monday, but it has pulled back to trade more recently at 1.475% Tuesday.

Higher bond yields, which move inversely to prices, can make owning gold, which doesn't offer interest, less appealing. The exchange-traded SPDR Gold Shares ETF (GLD), meanwhile, traded up 0.2%. if th

Mihir Kapadia, CEO of Sun Global Investments, said gold is being pressured by strength in the greenback, and a downturn in physical buying. The dollar, as measured by the U.S. ICE Dollar Index , which gauges the currency against a half-dozen rivals, was almost flat on the day but gained about 1% last week. Dollar strength tends to make buying bullion, which is priced in dollars, less attractive to investors using weaker currencies.

"With the chatter over [President Donald] Trump's choice for Fed chair starting to dominate, gold really is all about the greenback right now," said Adrian Ash, head of research at BullionVault.

From the 12-month peak on Sept. 8, gold has lost roughly 6.5%--and "it's dropped at its fastest pace versus the dollar since December 2016's sharp correction," he said.

"The metal might rally if the dollar now drops--say, on Trump picking 'low-rate Yellen' over 'rate-rise [Kevin] Warsh' within the 2-3 week deadline the president just set himself," said Ash. Gold's "strongly negative correlation with the dollar" might also "crack--perhaps if the S&P jumps on the prospect of lower for longer from the Fed."

Meanwhile, U.S. stocks, notably the Dow Jones Industrial Average and the S&P 500 index, setting more records. Much of the enthusiasm around equities has been driven by optimism that Trump's administration will implement tax policies, including tax cuts and repatriation of money held abroad, that could boost appetite for risky assets and away from gold.

In other metals trading, December silver added less than a cent to $16.660 an ounce, while the silver ETF, iShares Silver Trust (SLV) rose 0.3%.

December copper added under a cent to $2.963 a pound. January platinum fell 0.1% to $915.50 an ounce and December palladium shed 0.2% to $909.95 an ounce.

-Myra P. Saefong; 415-439-6400; AskNewswires@dowjones.com

 

(END) Dow Jones Newswires

10-03-17 1153ET

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