Rise in U.S. stock market lures investors away from gold
Gold futures declined Monday, with strength in the U.S. stock market fueling the precious metal’s settlement below the psychologically important level of $1,500 an ounce. Traders awaited this week’s Federal Reserve policy meeting, which could determine trading for a number of assets, including bullion.
“A bullish U.S. stock market that is near record highs is limiting buying interest in the safe-haven metals,” said Jim Wyckoff, senior analyst at Kitco.com.
The S&P 500 index SPX, +0.56% touched an intraday record on Monday for the first time since July 26, as gold futures settled, with investors looking to a busy week of earnings and a U.S. central bank that is expected to ultimately opt for another cut to interest rates.
Gold for December delivery GCZ19, -0.07% on Comex fell $9.50, or 0.6%, to settle at $1,495.80 an ounce, with prices finishing below $1,500 for the first time since Wednesday. December silver SIZ19, -0.34% edged down 5 cents, or 0.3%, to $17.876 an ounce.
The Fed is widely expected to deliver another quarter-point cut to its benchmark interest rate when policy makers conclude a two-day meeting on Wednesday.
Taking a look at the bigger picture for the precious metals, “the downside in gold and Silver Markets will be limited as their technical chart postures remain overall bullish,” Wyckoff wrote in a daily note.
Gold bulls’ next upside price objective is “to produce a close in December futures above solid resistance at $1,543.00,” he said. “Bears’ next near-term downside price breakout objective is pushing December futures prices below solid technical support at last week’s low of $1,484.00.”
U.S.-China trade talks also remain in focus, with developments between Washington and Beijing suggesting that they may be nearing a so-called phase one deal, which could be detrimental for gold prices, Stephen Innes, Asia Pacific market strategist wrote in a report for AxiTrader. Gold found support earlier this year as worries around trade sparked sustained bouts of demand for traditional havens.
In other metals trading action, December copper HGZ19, -0.07% gained 0.3% to $2.683 a pound. January platinum PLF20, -0.12% fell 1.5% to $919 an ounce.
December palladium PAZ19, -0.30% rose 2% to $1,779.30 an ounce, marking another record settlement.
“On the physical side it could get desperate, remember no palladium no car,” said R. Michael Jones, chief executive of Platinum Group Metals Ltd. PLG, +1.30% “Substitution of palladium for platinum is tricky and takes time. No easy relief is in sight.”