Metals: Gold Prices Rise as Dollar Weakens
By Amrith Ramkumar
Gold prices climbed Tuesday, buoyed by a weaker dollar and a number of investor concerns over possible market risks.
Gold for December delivery rose 0.7% to $1,293.80 a troy ounce on the Comex division of the New York Mercantile Exchange. Prices have advanced in three straight sessions and have bounced back following a recent selloff that was fueled by interest-rate concerns and a stronger dollar.
The WSJ Dollar Index, which tracks the U.S. currency against a basket of 16 others, was down 0.4% Tuesday, making gold more affordable to foreign buyers.
Analysts have said rising geopolitical concerns have also helped gold to start the week, as many investors favor the haven asset during times of geopolitical turbulence. Catalonia's president backed down on Tuesday from a declaration of independence from Spain that would take immediate effect, a move that could prolong the tense political standoff between the Catalan government and Madrid.
Some had also expected North Korea to launch another missile Tuesday on a public holiday following another vague weekend threat by U.S. President Donald Trump. And a recent spat between the U.S. and Turkey has added to a growing list of possible political risks, which have continued to support gold prices throughout the year.
"There's more worriers that seem to come back into the market," said George Gero, managing director at RBC Capital Markets.
Investors have also said growing concerns about possible inflation risks are pushing some traders toward gold. The International Monetary Fund raised its 2017 and 2018 economic growth projections for the world Tuesday. Some investors buy gold as a hedge against higher consumer prices.
Gold prices were still down more than 4% Tuesday from their year-to-date high hit in early September. Many investors are waiting to see if the precious metal can get back above $1,300 and stay there, as bets that the Federal Reserve will raise interest rates in December have recently weighed on gold prices. Gold struggles to compete with yield-bearing assets like Treasurys as borrowing costs rise.
"By now, most traders have gotten used to the pricing in of a December rate hike," Mr. Gero said.
Among base metals, copper for December delivery rose 0.3% to $3.0605 a pound -- its highest close in almost a month. The IMF gave another optimistic estimate for growth in China, the world's largest base metals consumer, in its Tuesday report. Similar upbeat readings on the global economy have supported industrial metals prices this year because copper and other metals are the building blocks of construction.
Write to Amrith Ramkumar at [email protected]