Metals Stocks: Gold prices rise as traders track weaker dollar, bet on slow economic recovery

Metals Stocks

Yellow metal marks first gain in 3 sessions


AFP/Getty Images

Gold futures ended higher on Tuesday, with slight support attributed in part to a weaker tone for the U.S. dollar as traders bet on a slow economic recovery, even as efforts were under way to reopen economies that were closed to contain the COVID-19 pandemic.

“It appears a safe-haven bid has returned to the precious metals amid changing marketplace notions regarding the pace of economic healing after the Covid-19 pandemic has subsided,” said Jim Wyckoff, senior analyst at Kitco.com, in a daily commentary.

“Traders and investors are assessing the markets ramifications of a very possible ‘second wave’ of the Covid-19 pandemic as major global economies start to reopen their businesses and transportation infrastructure,” he said. There is growing sentiment that economic recoveries, which had been factored into current market prices though solid rallies in many global stock indexes, will be “slower than initially expected.”

“If marketplace notions continue to shift to slower economic recoveries, it’s likely that many markets (especially the stock markets) will have to do some serious re-pricing—to the downside,” Wyckoff said. That would provide more support to haven gold.

Gold for June delivery on Comex
GCM20,
+0.04%

rose $8.80, or 0.5%, to settle at $1,706.80 an ounce following losses in each of the last two sessions. July silver
SIN20,
-0.24%

added 2.9 cents, or 0.2%, at $15.709 an ounce.

The ICE U.S. Dollar Index
DXY,
-0.23%
,
a measure of the currency against a basket of six major rivals, was down 0.3% as gold futures settled Tuesday. A weaker dollar can be a boost for commodities priced in the unit, making them less expensive to users of other currencies.

Chris Gaffney, president of World Markets at TIAA Bank, said that the rise in gold prices may continue “even if the economy makes a swift recovery.”

“As economies recover, support for gold prices will shift from safe haven buying due to fear of COVID-19, to buying due to fear of inflation and uncertainty surrounding the massive amounts of liquidity central banks have created,” he said in emailed commentary.

Among other metals, July copper
HGN20,
-0.69%

shed 0.9% to $2.359 a pound. July
PLN20,
-0.38%

fell 0.5% to $777.40 an ounce and June palladium
PAM20,
-0.59%

tacked on 0.4% to $1,835.40 an ounce.

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