Metals Stocks: Gold edges higher a day after decline induced by coronavirus vaccine hope

Metals Stocks

Silver, platinum and palladium futures post gains of over 2% Tuesday

Gold bullion on show at Merrion vaults in Dublin on January 7, 2019


PAUL FAITH / AFP

Gold prices finished higher Tuesday to recoup more than half of what they lost a day earlier, as Federal Reserve Chairman Jerome Powell said the U.S. central bank stands ready to provide more support for the domestic economy.

During testimony to the Senate Banking Committee Tuesday, Powell said “we need to be prepared to act further and I would say we are, if the need is there.”

“Powell signaled all emergency lending programs will be up by end of month and that the Fed and Congress may need to inject more money into the economy,” said Edward Moya, senior market analyst at Oanda, in a market update. The Fed is “far from done with pumping stimulus into the economy and gold prices are liking that.”

Gold for June delivery on Comex
GC00,
+0.89%

GCM20,
+0.89%

tacked on $11.20, or nearly 0.7%, to settle at $1,745.60 an ounce, following a 1.3% decline Monday, which marked the first decline in five sessions. Prices fell Monday as renewed optimism about a vaccine for the coronavirus undermined the need for a safe haven, causing gold to retreat from the highest intraday levels since 2012.

Although reports indicate that pharmaceutical company Moderna Inc.
MRNA,
-9.26%

has made some early progress toward a vaccine for the virus, some gold bulls say that the outsize fiscal and monetary stimulus measures enacted by governments across the globe will support gold buying over the long term.

“For long-term gold positions, a vaccine may not be an absolute game-changer as central bank balance sheets will not miraculously evaporate, and political/trade tensions between China and the U.S. are unlikely to de-escalate,” wrote Stephen Innes, global chief market strategist at AxiCorp, in a daily research note.

Gold prices have been mostly elevated recently, posting a climb last week, amid worries about the economic impact of the COVID-19 pandemic that has likely pushed the world into recession, underpinning the traditional haven appeal for the yellow metal that tends to rise during economic uncertainty.

Other metals traded on Comex also posted gains Tuesday. July silver
SIN20,
+2.90%

rose 43.3 cents, or 2.5%, at $17.901 an ounce, after climbing by more than 2% on Monday.

July copper
HGM20,
+0.58%

settled at $2.418 a pound, up 0.6%. July platinum
PLN20,
+3.14%

rose 2.3% to $889.60 an ounce and June
PAM20,
+2.18%

added nearly 2.4% to $2,074.70 an ounce.

Most palladium is in the catalytic converters of cars and “the Asia car market is back with vengeance,” with China car sales in April 2020 being over April 2019, R. Michael Jones, chief executive offer of Platinum Group Metals Ltd.
PLG,
+6.55%

told MarketWatch. Earlier this month, the China Association of Automobile Manufacturers reported that Chinese carmakers shipped 2 million vehicles to dealerships and stores in April, up 0.9% from a year earlier, according to Bloomberg News.

“A family road trip rather than boarding a plane could become a trend. Personal, private, and clean are all words that we could see in car ads soon. Low gas prices add to the attraction,” Jones said.

Read:Signs of a rebound in gasoline demand hint at higher oil prices

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