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Gold prices headed sharply higher Tuesday as global equities staged a modest retreat after being buoyant for weeks on the back of the reopening of economies stricken by the coronavirus pandemic.
Prices for the precious metals are finding some traction “in the wake of a risk off global trade in equities, official recession labeling for the U.S. economy and because of the markets capacity to reject sub-$1,700 pricing for a second day in a row,” analysts at Zaner Metals wrote in a daily note.
Read:U.S. entered recession in February after end of longest expansion in history, NBER finds
Against that backdrop, August gold GCQ20, +1.23% on Comex was up $23.20, or 1.4%, at $1,728.30 an ounce, after finishing Monday’s session up 1.3%. Meanwhile, July silver SIN20, -0.04% added nearly a penny, or 0.04%, to trade at $17.90 an ounce, following a 2.4% climb in the previous session.
European stock market suffered declines on Tuesday, and U.S. benchmark stock indexes traded broadly lower as investors looked for a new catalyst to push stocks higher after the Nasdaq Composite Index COMP, +0.27% established a new closing high on Monday, retracing all of its losses from the coronavirus rout in March.
Gold has seen a return to basics, trading firmly over $1,700 an ounce, on the first day of the U.S. Federal Reserve’s monetary policy meeting, said George Gero, managing director at RBC Wealth Management.
Volatility is expected this week in gold, with “many economic and political headlines to come [and] traders anxious” Wednesday’s Fed statement, he said in emailed commentary.
Investors also eyed weakness in the U.S. dollar, which precious metals are priced in, and a slide in yields of government debt. A weaker dollar can lift appetite for gold from buyers using other currencies and falling yields can boost the appeal of gold which doesn’t offer a coupon.
The U.S. dollar was down 0.2% at 96.43, as gauged by the ICE U.S. Dollar Index DXY, -0.30%, the 10-year Treasury yield TMUBMUSD10Y, 0.820% was down nearly 7 basis points at 0.81%.
Among other metals traded on Comex, July copper HGN20, +0.91% tacked on 0.9% to $2.5885 a pound. July platinum PLN20, +0.44% rose 0.5% to $865.30 an ounce, but September palladium PAU20, -3.52% traded at $1,961.80 an ounce, down 3.7%.
