by Dalton Barker
Gold climbed on Wednesday as general economic fears were not alleviated by yet another strong United States labour report.
Gold for April delivery on the Comex division of the New York Mercantile Exchange gained $12.80 or one percent to $1,243.60 per ounce. Trade has ranged from $1,225.10 to $1,244.80.
Despite a lack of new financial programmes out of the G-20 meeting, investor tensions eased this week heading into the Friday US employment report.
In today’s data, ADP Non-Farm employment in February rose by 214,000, which beat the forecast of 185,000 and serves as another indication that underlying economic fundamentals remain solid.
Nevertheless, market participants remain skeptical after equity markets tumbled to begin the year.
“Uncertain times in financial markets have triggered investment demand for assets with safe haven characteristics,” Georgette Boele, a strategist at ABN AMRO, said. “Second, lower US Treasury yields are increasing the attractiveness of gold and other precious metals as gold doesn’t pay a coupon or dividend.”
Fears of a US economic downturn are not supported by recent data – including key indicators like car sales – but evidence remains that investors are still concerned over the health of the global economy and are using gold’s traditional hedging qualities in the interim.
“Given the firm stock markets, rising US bond yields, increasing Fed interest rate expectations again and appreciating US dollar, however, gold is still faring relatively well,” Commerzbank said. “It is presumably finding support from the ongoing ETF inflows – another 10.8 tons being recorded yesterday.”
Over the past several days, CME Fed fund futures have reversed strongly – previously, investor sentiment had worsened to the extent that the second half of 2017 was seen as the earliest that the FOMC could lift rates again. But a majority now see a rise in November or December this year.
Turning to US equities, the Dow Jones industrial average and S&P were down 0.2 percent and 0.1 percent respectively, while the dollar was essentially unchanged at $1.0871 against the euro.
As for other precious metals, Comex silver for May deliver rose 25.4 cents or 1.7 percent to $15.010 per ounce. Trade has ranged from $14.770 to $15.045.
“Technically it’s going to take a jump over $1,250 before gold will trend to higher prices and silver will of course follow on that event as well,” Heraeus Metals stated in a note.
Platinum for April settlement increased $1.40 or 0.2 percent to $938.10, while the most-actively traded palladium contract stood at $515.20 percent, down $2.15.
(Editing by Tom Jennemann)
