MW: Gold rises to a roughly 15-week high as dollar wobbles
Gold prices jumped Thursday, attempting to snap a string of three declines, as the dollar lost ground to chief rivals in the wake of a fuzzier-than-expected interest-rate assessment from the Federal Reserve.
April gold GCJ7, +1.19% rose $10.80, or 0.8%, to $1,244.10 an ounce. A close at that level would mark the highest settlement for a most-active contract since Nov. 10, 2016, according to FactSet data. Thursday’s gain picks up on after-hours Wednesday rise and dollar declines. Some metals traders read the minutes as casting doubt on the timing and pace in future rate increases.
In the notes from the Fed’s Jan. 31-Feb. 1 meeting, Fed members indicated an interest in hiking rates “fairly soon,” but noted that the fiscal policy of President Donald Trump was still a wild card.
Earlier hints that the Fed would move to raise rates rapidly had led to a stronger dollar. That, in turn, usually provides a headwind to dollar-pegged assets including gold, making them less attractive to buyers using other monetary units.
Following the release of the minutes, however, the dollar declined. And early Thursday, the WSJ Dollar Index, BUXX, -0.36% a measure of the U.S. dollar against 16 major currencies, declined 0.1% to 91.05. The ICE U.S. Dollar Index, DXY, -0.24% which gauges the buck against six rivals, slipped 0.1% to 101.08.
Gold held on to its morning gains after a weekly report on jobless claims rising 6,000 to 244,000 in the week ended Feb. 18, near the 237,000 forecast by economists polled by MarketWatch and hanging around its lowest levels since the early 1970s.
Still, gold has been locked in a fairly tight range as markets take in the nuances of Fed hints on policy.
“You can see that we are stuck in this ugly range of 1218 and 1242 and the price has been consolidating between this range,” said Naeem Aslam, chief market analyst with Think Markets. “We need a new catalyst to break out of this range.”
Inflation risks and Fed aggressiveness can be conflicting factors for gold. “The major reason is inflation here and the market does not really believe that the Fed will be able to increase the interest rate three times this year,” Aslam said. A plot of forecasts on future rates from Fed policy members, known as the dot-plot, implied that the central bank could lift rates at least three times in 2017.
The exchange-traded fund SPDR Gold Trust GLD, +0.14% was little changed premarket. The iShares Silver ETF SLV, +0.47% rose 0.3%, while the VanEck Vectors Gold Miners GDX, -1.18% rose 0.2%.
In other metals trading on Comex, May silver SIK7, +1.04% rose 5 cents, or 0.3%, at $18.07 an ounce. May copper HGK7, -0.47% fell 2 cents, or 0.7%, to just under $2.73 a pound. June palladium PAM7, +1.05% fell $1.50, or 0.2%, to $768.70 an ounce. April platinum PLJ7, +1.09% declined $1.30, or 0.1%, to $1,001.40 an ounce.
