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Oct 24, 2016

From MarletWatch | Metal Stocks | Gold: Gold Churns After Weekly Gain as Dollar Steadies, Stocks Point Higher

Rachel Koning Beals

Bloomberg News
Molten gold is poured into molds.
Gold futures slumped Monday, unable to immediately add to the roughly 1% gain tallied last week when uncertainty around the timing of the Federal Reserve’s next interest-rate hike lifted the yellow metal despite some strength in the U.S. dollar.
TimeGold - Electronic Dec 201625 Jul8 Aug22 Aug5 Sep19 Sep3 Oct17 Oct
December gold GCZ6, -0.25%   fell $1.50, or 0.1%, to $1,266.10 an ounce, and has so far ranged between roughly $1,263 and $1,268. The midweek push to a two-week high near $1,269 helped gold score that weekly advance despite mixed action across several sessions.
Early Monday, December silver SIZ6, +0.81%  diverged with its yellow-metal cousin, gaining 15 cents, or 0.8%, to $17.64 an ounce. Silver ended last week with a narrow 0.3% gain.
The U.S. dollar strengthened Thursday and Friday against the euro, in particular, in the wake of the European Central Bank’s decision to leave its monetary policy unchanged and accommodative.
On Monday, the ICE U.S. Dollar Index, DXY, -0.11%   a measure of the U.S. currency against six rivals, was little changed near 98.63. The dollar and gold often move inversely because a firmer buck leaves dollar-priced commodities less desirable to purchasers using another currency.
U.S. stocks are headed for early gains, lifted by a flurry of merger news. Stock gains could limit demand for gold as investors seek out higher-risk investments.
Central bank decision-making comes against the backdrop of intensifying inflation watching.
“We’ve recently gotten data from several countries that suggest inflation may be starting to return, or at least that the global deflation scare may be over. Consumer price inflation in the U.S., Britain, and most crucially, China, has turned higher recently,” said Marshall Gittler, head of investment research at FX PRIMUS, in a commentary.
“The return of inflation would probably be positive for the dollar,” he said.
That’s likely true in the short term, while the risk of deeper inflation could eventually restore gold’s hedging appeal, most analysts say.
Futures markets still see a better-than-60% chance that the U.S. further distances itself with other major economy monetary policy with an interest-rate hike in December, according to the CME FedWatch tool.
Monday’s U.S. economic calendar is light, featuring a Chicago Fed release on national economic activity. See the entire economic calendar for the week, including housing and consumer data.
In related exchange-traded fund trading, the SPDR Gold Trust GLD, +0.07%  slipped 0.1% after a weekly rise of 1.3%, while the VanEck Vectors Gold Miners ETF GDX, -0.77%  gave up 0.1% after its weekly gain of 7.2%.