Gold holds ground at multimonth high as dollar index firms, U.S. equities weaken

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Gold futures held ground Wednesday at their highest levels since July, with the precious metal finding support from stock-market uneasiness, but also pressured by a firmer dollar.

The typically “haven” gold market so far showed little reaction to news that Russian antiterrorism experts are investigating a blast at a school cafeteria in Crimea early Wednesday, reported to have killed at least 10 people and injured another 50, according to The Wall Street Journal. Gold has been slightly underpinned as global markets take in the handling of U.S. and Saudi Arabian relations after the disappearance and alleged murder of a journalist at the Saudi consulate in Istanbul.

December gold














GCZ8, -0.04%












 rose $1.30, 0.1%, to $1,232.30 an ounce. The contract settled Tuesday at $1,231, the highest since July 31 for a most-active contract, according to FactSet data. Gold was up 3% so far for October, trimming its year-to-date drop to close to 6%. December silver














SIZ8, -0.21%












added 4.4 cents, or 0.3%, at $14.745 an ounce.

Stocks and gold have been volatile amid mounting concerns over rising Treasury rates














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A rapid climb in rates also has coincided with weakness in the U.S. dollar and gold tends to gain when the dollar is weaker because the assets become comparatively more attractive to buyers using other monetary units. One popular measure of the buck, the ICE U.S. Dollar Index














DXY, +0.29%












was up 0.3% at 95.40 Wednesday and remains just in the red for the month of October so far. Stocks were lower in early trade after the battered market’s biggest one-day gain since March on Tuesday.

Recent dollar sluggishness has defied the stronger trend that has persisted in the buck in the year so far, a rise fueled by monetary policy tightening at the Federal Reserve. The popular U.S. index is up 3.1% so far in 2018, according to FactSet. The Fed has hiked interest rates three times this year and may do so a fourth time before year-end, which could provide some resistance to gold bulls because rising rates are likely to juice the dollar and make risk-free government bonds a more attractive investment when compared against bullion.

The latest clues on interest rates will come with the release of minutes from the Federal Open Market Committee’s September rate-setting meeting Wednesday afternoon, although after the gold market’s settlement. See the economic calendar

Witt inflation was absent from the U.S. Industrial production data released Tuesday, “it doesn’t shift the Fed dial,” said Stephen Innes, Asia-Pacific head of trading at Oanda.

“This view is significant for gold prices as it suggests without an uptick in U.S. Inflation for the USD to tether itself to in the run up to the U.S. election, we could see the dollar selloff as U.S. political headline risk is expected to escalate and should lead to gold outperformance,” he said in a note Wednesday.

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Source : MTV