Gold futures slipped Thursday as a leading dollar index twisted in mixed trading, with the metal so far failing to find the haven bid that might be expected alongside a sharp tumble in early stock trading.
Gold prices have largely consolidated over a couple of sessions since settling at their highest level since July earlier this week, hitting that level mostly on the back of week-to-date dollar weakness.
The ICE U.S. Dollar Index DXY, -0.03% was last down less than 0.1% and has spent time in positive and negative territory, on its way to a 0.2% weekly decline so far. Typically, a stronger buck dulls investment demand for dollar-priced commodities, like gold, and vice versa. The dollar had drawn safety buying of late when global stock markets are roiled.
U.S. stock futures tumbled Thursday, with selling so intense at one point that circuit breakers were triggered, after the arrest of a China-based Huawei executive reignited the trade worries that had helped drag equities to their worst session since early October earlier this week.
Concern about a possible U.S. recession and an inversion for at least part of the Treasury yield curve, with 10-year Treasury yields TMUBMUSD10Y, -0.48% at a three-month low below 3%, have pressured the greenback. In turn, gold has recovered about 7% from the 19-month lows hit in mid-August.
Some signs of gold’s haven status performing as expected emerged in exchange-traded fund data.
Gold-backed ETFs benefitted from ongoing global stock market volatility, the under-performance of other commodities, such as oil, and geopolitical developments, the World Gold Council said in a release Thursday morning.
U.S. dollar flows into gold-backed ETFs, including the popular SPDR Gold Shares GLD, +0.61% , are now positive for the year, having raised $354 million in November, a second straight month for inflows, the WGC reported. U.K. inflows to gold ETFs were also strong as Brexit concerns have ramped up alongside a softening in sterling, said Juan Carlos Artigas, the WGC’s director of investment research.
““As market volatility continued and commodities like oil underperformed, global gold-backed ETFs saw a second month of inflows, rising by $804 million [in total] and reflecting a full reversal of what had been an outflow trend on the year,” Artigas said.
Later in the week, job-market data, a key report for the Federal Reserve ahead of its last rate-setting meeting of 2018 on Dec. 18-19, will come into focus. Attention remains on economic data for signs that the Fed can stick to its plan for continued modest rate increases — a gold-negative factor — into early next year. Markets have lost some confidence in the Fed’s likelihood to stick with this projected rate-hike path. See economic calendar
“We expect rising precious metals prices next year because the U.S. dollar is likely to depreciate when the Fed rate hikes come to an end,” said Carsten Fristch and the commodities analysts at Commerzbank in their 2019 outlook. “Only palladium is unlikely to climb any further next year,” they added.
March palladium PAH9, -1.38% fell 1.4% to $1,168 an ounce, risking an end to a run of record settlements. The spot price for the metal tapped an intraday high of $1,258 Wednesday, according to data form Kitco, surpassing the price of gold.
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