Agoracom Blog

Gold retakes $1,300 level for first time in 9 months $ $ $ $ $ $ $

Posted by AGORACOM-JC at 11:50 AM on Friday, August 18th, 2017

  • Gold futures on Friday were trading above $1,300 for the first time in 2017 and were on track for their third straight daily gain, as precious metals drew haven demand
  • Sparked by a selloff in a global equities, a terrorist attack in Barcelona and concerns about President Donald Trump’s pro-business agenda

Gold for December delivery GCZ7, +0.60%  gained $8.60, or 0.7%, at $1,301.90 an ounce, marking the highest level for a most-active contract since Nov. 4, according to FactSet data. The yellow metal also is on pace for a weekly gain of about 0.5% based on last Friday’s closing level.

Meanwhile, September silver SIU7, +0.25%  also rose, picking up 12 cents, or 0.7%, at $17.170 an ounce, on track for a weekly gain of about 0.6% and its highest closing level since around June.

A flight to assets perceived as safe has been underpinned by Thursday’s selloff in equities, highlighted by the worst downdraft for the Dow Jones Industrial Average DJIA, -0.28% and S&P 500 index SPX, -0.16%  since May 17.

Selling accelerated on Thursday, and threatened to continue to undercut sentiment on Friday, after a van plowed into crowds in one of Barcelona’s tourist venues, killing at least 13 people and injuring scores. Islamic State has claimed responsibility for the terror attack.

So-called risk assets, like stocks, had been riding higher drawing concerns that equities have become too richly priced making them vulnerable to a sharp slide after a run of repeated records and an erosion of confidence in Trump’s ability to enact policies that would help to boost the U.S. economy.

Markets were roiled Wednesday by unfounded rumors that presidential economic adviser Gary Cohn, a former Goldman Sachs executive, was set to resign his post as White House economic adviser in response to the president’s reaction to a white-supremacist rally that left one woman, Heather Heyer, dead. Trump’s response to the rally has caused a furor among business leaders.

That political turmoil has thrown into question Trump’s ability to follow through on campaign promises, including pledges on deregulation, tax cuts and a boost to infrastructure spending that had helped propel risk assets higher and gold lower.

However, mounting headwinds in the stock market have provided a path for gold and Treasury notes to climb higher.

The 10-year Treasury note TMUBMUSD10Y, -0.60%  was recently yielding 2.19%, compared with about 2.24% at the start of the week. Bond prices move inversely to yields.

Lower bond yields can help to support buying of precious metals, which don’t offer a yield.

Weakness in the U.S. dollar, buffeted by the trove of risk factors, including concerns that the Federal Reserve will be hesitant to lift interest rates further this year, also has helped to lift gold’s price. The ICE U.S. Dollar Index DXY, -0.24% which measures the buck against six rival currencies, was off 0.1% and down on the day, although it has climbed 0.5% this week.

A softer dollar makes purchasing assets priced in the currency more attractive to buyers using weaker monetary units.

In exchange-traded funds, SPDR Gold Shares GLD, +0.45%  was up 0.5%, the miner-focused VanEck Vectors Gold Miners ETF GDX, +1.24% gained 1% and iShares Silver Trust SLV, +0.25%  was trading 0.7% higher.


Tags: , , , ,

Comments are closed.