Yellow metal sees a wide, nearly $75/oz trading range Tuesday
Gold futures climbed Tuesday to notch another record-high settlement as a fall in U.S. consumer confidence boosted the precious metal’s haven appeal.
The gains came after the Conference Board reported that the index of consumer confidence fell to 92.6 this month from a revised 98.3 in June. The U.S. dollar, meanwhile, stabilized after a sharp decline this month, while investors waited for the outcome of the Federal Reserve’s policy meeting on Wednesday.
“The arguably epic rally in gold continues,” said Jason Rotman, director at Everplus Capital, in emailed commentary. “The demand for gold as a safe haven to central bank funny business has gained momentum and I still believe under current conditions $2,200 is my next price target.”
“However, there is always a counterpoint to any investment thesis. The counterpoint to gold not hitting $2,200 would be a massive momentum shift in the spread of COVID and GDP really starts to pick up again above expectations,” he said. “This seems like a long shot at this point.”
August gold GC00, 0.10% GCQ20, 0.10% rose $13.60, or 0.7%, to settle at $1,944.60 an ounce, the highest finish on record for a most-active contract. It traded as high as $1,974.70 to top the intraday record set on Monday, but it also fell to as low as $1,900.20 to mark a wide Tuesday trading range.
The moves came as the ICE U.S. Dollar Index DXY, -0.03% was little changed at 93.62, following a recent drop to a two-year low, and it is down by 0.9% week to date. Weakness in the dollar can provide support for dollar-denominated commodities.
Silver futures also tapped a seven year, intraday high, at $26.275 an ounce—the highest most-active contract price level since April 2013, before ultimately ending the session lower. September SIU20, -0.25% fell 20 cents, or 0.8% to $24.30 an ounce.
Silver prices had settled Monday at their highest since August 2013. “This silver rally is a combination of being a technical correction as well as silver been bought as its industrial application may be more prevalent with the fundamental expansion of technology,” said Rotman.
Meanwhile, overall weakness in the U.S. dollar, “low-to-negative U.S. real yields, rising inflationary pressures, the possibility of global stagflation and the slippery market conditions remain supportive of a strong gold in the medium, long run,” said Ipek Ozkardeskaya, senior analyst at Swissquote Bank, in a recent note.
“However, the rapid surge in gold prices also increases the risk of swift profit taking and a sharp downside correction,” she said, noting that gold rallied more than $500 an ounce since March. “There is room for a decent retracement.”
So far this week, gold still has stormed higher, and gained more than 26% this year.
The rollout of the U.S. Senate Republican $1 trillion stimulus plan added to concerns about monetary financing of government spending, with the Federal Reserve on Tuesday starting its two-day interest-rate-setting meeting. The gains for gold also come amid the tense relationship between the U.S. and China.
Among other metals on Comex Tuesday, September copper HGU20, -0.12% rose 0.7% to $2.9175 a pound. October platinum PLV20, -1.15% tacked on 2% to $986.20 an ounce and September palladium PAU20, -0.59% lost 0.2% at $2,365.50 an ounce.
“Gold had a good shot at the number one main precious metal, but palladium did not stand still and is giving gold a good run for money for the top spot,” said R. Michael Jones, chief executive officer of Platinum Group Metals Ltd. PLG, -7.28%, noting that palladium has climbed from around $1,900 on July 10.
“It is interesting that both metals are precious and running up as fears of inflation circulate,” he told MarketWatch Monday. “However, gold and palladium are very different as gold is thought of as a safe haven form of money and palladium is used in the tail pipes of cars as a catalytic converter.”
“Personal transport is super important in these times and car sales are coming back fast—driving demand for palladium,” he said.