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Gold futures climbed on Wednesday, eyeing their highest finish in almost seven weeks, as benchmark U.S. stock indexes traded mostly lower and the dollar and Treasury yields weakened.
February gold
GCG22,
GC00,
rose $14.30, or 0.8%, to trade at $1,828.90 an ounce, following a 0.8% rise on Tuesday. A settlement above the $1,828.60 close from the last trading day of 2021 would be the highest since Nov. 19 for a most-active contract, FactSet data show. Prices had fallen at the start of the week to their lowest level since Dec. 21, FactSet data show.
March silver
SIH22,
SI00,
also added 14.9 cents, or 0.7%, to $23.205 an ounce, a day after tacking on 1.1%.
A gauge of the buck, the ICE U.S. Dollar Index
DXY,
was down 0.3%, boosting the appeal of dollar-denominated gold prices, while the 10-year Treasury note
TMUBMUSD10Y,
was edging back to around 1.65%. U.S. benchmark stock indexes traded mostly lower, with the Nasdaq Composite Index
COMP,
down 0.5%.
Strategists said that the commodity market was making its bullish bets on the outlook for gold, amid the spread of the omicron variant of the coronavirus that causes COVID-19, but were eagerly anticipating the minutes from the Federal Reserve’s Dec. 14-15 meeting to glean further clues on the Fed’s tactics for tackling rising inflation.
“The safe-haven metals are getting some support from a bit more risk aversion in the general marketplace at midweek,” wrote Jim Wyckoff, senior analyst at Kitco.com in a Wednesday note.
“Traders are awaiting the U.S. data point of the day, which is this afternoon’s Federal Open Market Committee minutes from the December meeting,” he wrote.
Minutes are set to be released at 2 p.m. Eastern time, about a half-hour after gold futures trade settles on Comex.
The Kitco analyst said that “gold futures bulls have the overall near-term technical advantage amid a three-week-old price uptrend in place on the daily chart.”
“Bulls’ next upside price objective is to produce a close in February futures above solid resistance at $1,840,” Wyckoff wrote, adding that bears are looking at a breach of technical support at $1,785 an ounce.
Meanwhile, metals markets didn’t show much of a reaction after ADP reported that private-sector payrolls rose by 807,000 in December, more than double the 375,000 expected by economists. The report comes ahead of the closely watched Labor Department report due Friday.
The official U.S. jobs report is due Friday, with economists looking for the economy to have added a total 422,000 jobs.
The jobs market is of importance for commodity markets because it could impact the Fed’s plans after the central bank in December said it would wind-down its asset purchases by March, with projections showing three interest-rate increases ahead in 2022.
“All of the current economic news is being viewed through the lens of investors speculating on how fast the Fed could start raising interest rates after its asset purchase program ends in March,” said Colin Cieszynski, chief market strategist at SIA Wealth Management, in a market update.
On Comex, copper bucked the upward trend for metals, with the March contract
HGH22,
trading at $4.444 a pound, down 0.7%.
April platinum
PLJ22,
added 1.8% to $988.80 an ounce and March palladium
PAH22,
rose 2.1% to $1,898 an ounce.
