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Gold prices ended higher Thursday as a strong growth in U.S. coronavirus cases contributed to losses in the U.S. stock market as well as a slide in government bond yields.
Prices for the metal benefited from a “risk-off trade,” with investors being “cautious about the resurgence” in U.S. coronavirus cases, Naeem Aslam, chief market analyst at AvaTrade, told MarketWatch.
New coronavirus cases in the U.S. rose for the ninth day in a row, as hospitalizations for COVID-19 ratchet higher.
The U.S. reported more than 144,000 new cases for Wednesday, up about 4,000 from the day before, according to data compiled by Johns Hopkins University. The total number of confirmed cases nationwide topped 10.4 million.
“Despite a promising development in late-stage COVID-19 vaccine trials, investors remain concerned about the potential economic fallout from the imposition of stricter restrictions to curb the outbreak,” which could support gold prices, said analysts at ICICI Bank, in a daily report.
December gold GCZ20, +0.74% climbed by $11.70, or 0.6%, to settle at $1,873.30 an ounce, following a 0.8% decline on Wednesday.
Silver futures for December delivery SIZ20, +0.38% added 4 cents, or 0.2%, to finish at $24.306, following a 0.8% decline in the previous session.
The moves for the assets come as the 10-year U.S. Treasury note yield TMUBMUSD10Y, 0.896% pulls back from around 0.98% to 0.89% on Thursday. A steadying U.S. dollar, off less than 0.1% on Thursday, at 92.971, as measured by the ICE U.S. Dollar Index DXY, -0.09%, may have also helped to support bullion on Thursday.
Rising yields can undercut appetite for precious metals as can a climb in the greenback, which commodities tend to be priced in.
Additionally, the gold market continues to deal with “uncertainties in relation to the election, such as who will control the Senate,” said Aslam. “This really important because if the Senate isn’t under Democratic control, it means more challenges for the second stimulus package.” That matter may not be settled until a pair of runoff elections in Georgia conclude in January.
Gold is off nearly 4% so far this week, according to FactSet data, after its worst daily drop in seven years on Monday was prompted by news from Pfizer PFE, -2.47% and BioNTech BNTX, -6.41% of an effective coronavirus vaccine.
“Gold has not yet managed to recover after the $100 collapse which followed Pfizer’s vaccine announcement as investors moved to riskier assets,” wrote Carlo Alberto De Casa, chief analyst at ActivTrades in a daily note.
“The bullion price is stagnating at $1,870 without being able to achieve significant and stable recoveries,” the commodity strategist wrote. “The main scenario remains risk on, even if it seems likely that some traders will take home some profits over the next few days with any consolidation on the stock market giving gold a welcome chance to breathe,” he said.
Gold prices had added to earlier gains shortly after of U.S. economic data released early Thursday.
The cost of living leveled out in October, reflecting the continuing stress on the economy caused by the coronavirus pandemic. The consumer-price index was unchanged last month, the government said Thursday.
The number of Americans who applied for state unemployment benefits during election week fell by 48,000 to a pandemic low of 709,000.
In other Comex trading, December copper HGZ20, +0.16% tacked on nearly 0.4% to $3.145 a pound. January platinum PLF21, +1.88% rose 1.8% to $884 an ounce and December palladium PAZ20, +1.43% added 1.1% to $2,341.90 an ounce.
