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Metals Stocks: Gold tops $1,700 an ounce; silver settles at highest since June

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Gold futures topped $1,700 an ounce on Tuesday for the first time in about a month, while silver prices marked their highest price settlement since June, with both precious metals buoyed by a retreat in the U.S. dollar and Treasury yields.

Investors also awaited October U.S. consumer price inflation data due Thursday, which will likely help guide the Federal Reserve’s next decision on monetary policy.

Price action

Gold futures for December delivery
GCZ22,
+2.09%

climbed $35.50, or 2.1%, to settle at $1,716 per ounce on Comex. Prices for a most-active contract settled at their highest since Oct. 6, according to Dow Jones Market Data.

December silver
SIZ22,
+2.32%

added 58 cents, or 2.8%, to settle at $21.502 per ounce, its highest finish since June 21.

December palladium
PAZ22,
+1.29%

added $35.10, or nearly 1.9%, to $1,932.60 per ounce, while January platinum
PLF23,
+1.95%

rose $25.10, or 2.5%, to $1,014.50 per ounce.

Copper for January
HGZ22,
+1.43%

delivery rose 8 cents, or 2.2% to $3.6825 per pound.

What’s happening

Gold and silver futures finished higher on Tuesday, shaking off early declines, as the U.S. dollar retreated for a third day and Treasury yields weakened.

The ICE U.S. Dollar index
DXY,
-0.35%

was down 0.4% at 109.667 with the U.S. midterm elections under way, while the 10-year Treasury note yield
TMUBMUSD10Y,
4.137%

fell more than 7 points to 4.137%.

See: What midterm election results mean for the stock-market bounce, according to Morgan Stanley’s Wilson

Weakness in the dollar makes commodities priced in the unit less expensive to users of other currencies. Meanwhile, lower yields lower the opportunity cost of holding nonyielding gold against government bonds.

Chintan Karnani, director of research at Insignia Consultants in New Delhi, attributed the rise in gold prices to weakness in the dollar, as well as “technical buying” as gold managed to trade above its 50-day moving average. The 50-day moving average for December gold stands at $1,680.99, according to FactSet data.

Gold also saw short covering as prices broke past $1,700, Karnani told MarketWatch.

December gold now “faces resistance” at the 100-day moving average, he said. FactSet pegged the 100-day moving average at $1,731.16.

Silver prices look ‘more bullish’

Silver, however, “looks more bullish” than gold, though gold is “moving from a neutral short-term perspective into a bullish set-up,” said Peter Spina, president of GoldSeek.com. He pointed out that silver is now back to its 200-day moving average, but gold is still nearly $100 away from that moving average.

“We will see in the coming days if the move is for real, if it was the shorts scrambling to cover or if the demand is sustainable from institutional to retail demand,” he told MarketWatch.

Spina said there is “a large global drain on silver stocks.” He sees silver, as well as gold, as “excellent” buys on pullbacks.

Meanwhile, a closely watched report on U.S. inflation in October is due out on Thursday, with economists expecting the consumer-price index to show prices increased by 7.9% on a year-over-year basis.

The inflation report “will be a big market mover with rates and the U.S dollar,” said Spina.

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