Gold futures rose on Wednesday, putting the precious metal on track to register a fifth straight gain, as investors continued to buy the safe haven asset, even though securities seen as risky also gained altitude on the back a slowdown in the spread of China’s coronavirus.
Some investors have attributed the climb in bullion, despite some factors that should weigh on it, to comparatively weaker government bond yields and a Federal Reserve that has kept interest rates low.
“Meanwhile, gold continues its move higher in the face of a stronger dollar and that is because real rates continue to decline and I remain very bullish on gold,” wrote Peter Boockvar, chief investment officer at Bleakley Advisory Group, in a Wednesday research report.
Gold for April delivery GCJ20, +0.40% on Comex rose $6, or 0.4%, at $1,609.60 an ounce after surging 1.1% on Tuesday, marking its highest settlement and intraday level for a most-active contract since March 2013, according to FactSet data.
Read: Why gold prices topped $1,600 and may soon hit a more than 7-year high
March silver SIH20, +0.50% picked up 11.5 cents, or 0.6%, at $18.265 an ounce, extending its climb to its highest finish since early January of this year.
Read: Why silver prices may climb to their highest yearly average since 2014
The benchmark 10-year Treasury note yield TMUBMUSD10Y, +0.11% was at 1.559%, at last check. Low yields can make precious metals, which don’t offer a coupon, more attractive to investors.
The minutes from the rate-setting Federal Open Market Committee’s late January meeting are due out at 2 p.m. Eastern Time, a half-hour after metals settle on Comex. The Fed’s account of its January meeting could shed light on how the central bank is factoring the global economic impact of China’s epidemic.
While the FOMC at the January meeting was “unanimous in declaring the current stance of policy ‘appropriate,’ Powell noted in his post-meeting press conference that under a different policy framework, such as average inflation targeting, the conclusion could be different,” said Marshall Gittler, head of investment research at BDSwiss Group.
“We will be looking for any more detail about these alternative ways of managing monetary policy and which way the Committee is leaning,” he said in a note, adding that there could also “be some information about the Fed staff’s insight into the economic impact of the coronavirus.”
Meanwhile, gold briefly pared gains after U.S. economic data published early Wednesday.
The U.S. producer-price index jumped 0.5% last month, the largest gain since the fall of 2018. Economists polled by MarketWatch had predicted a 0.2% advance. And a report on housing showed that builders started construction on new homes in the U.S. at a pace of 1.57 million in January, the Commerce Department said Wednesday, representing a 3.6% decrease from a revised 1.63 million in December, but was 21.4% higher than a year ago.
Among other metals, March copper HGH20, +0.08% edged down by 0.6% to $2.588 a pound.
April platinum PLJ20, +1.03% added 1.3% to $1,006.30 an ounce, with prices for the most-active contract on track for its highest finish since Jan. 24, FactSet data show.
March palladium PAH20, +2.47% added 3.9% to $2,594.90 an ounce, extending its climb to fresh records.
While many doubt the largest palladium supply deficit projections will be realized “due to softer Chinese auto catalyst inspired [platinum group metals] demand, it is possible that the explosion in prices will result in physical palladium supply being hoarded by investors,” analyst at Zaner Metals wrote in a daily note. That, in turn, “could effectively result in a lack of available supply for industrial uses.”