Gold futures popped modestly higher Wednesday a day after the precious metal lost its grip on the psychologically significant level at $1,500, amid gains in stocks, yields and a firmer U.S. dollar — all headwinds for the commodity.
On Wednesday, some of those factors have moderated somewhat, with bond yields edging slightly lower along with the dollar.
December gold GCZ19, +0.49% on Comex rose $5.50, or 0.4%, at $1,489.20 an ounce, after sinking 1.8% to settle at the lowest level for a most-active contract since Oct. 15 and notching the biggest one-day dollar and percentage decline since Sept. 30, according to FactSet data. Tuesday’s dip marked the first time in four sessions that the metal finished below $1,500, a level seen by technical analysts as a dividing line between bearish and bullish sentiment
December silver SIZ19, +0.21%, meanwhile, shed 10 cents, or 0.1%, at $17.545 an ounce, following a 2.8% slide that dragged gold’s sister metal to a two-week low.
“With bond prices falling and yields on the rise, investors are evidently reducing their expectations over aggressive rate cuts from global central banks. So, gold’s weakness makes some sense,” wrote Fawad Razaqzada, technical analyst at Forex.com, in a Wednesday research report.
He said, however, that gold hasn’t entirely lost its luster, even if further weakness in price are expected.
“However, while further short-term falls look somewhat more likely than it did a couple of weeks ago, the longer-term outlook remains positive for gold,” the Forex.com analyst said.
“One has to remember that China is a big consumer of the precious metal. The prospects of a trade deal therefore boosts the physical demand outlook for gold both directly, and indirectly via a stronger yuan,” he wrote.
Recent reports have indicated that U.S. and Chinese officials were actively considering rolling back some tariffs to complete the partial trade agreement.
Gains for gold picked up slightly on Wednesday after a weaker-than-expected report the productivity of American workers. Productivity declined at a 0.3% annual rate from July to September, the government said Wednesday, marking the first decline in four years. Productivity fell a somewhat smaller 0.1% among American manufacturers.
The U.S. dollar, as measured by the ICE U.S. Dollar Index DXY, -0.19%, was down 0.2% after a 0.4% gain, while the 10-year Treasury yield TMUBMUSD10Y, -1.95%, which falls as prices rise, was at 1.83% from 1.865% late Tuesday.
A weaker dollar and lower yields can make gold and precious metals comparatively more attractive to commodity investors.