Metals Stocks: Gold scores gains for the day and week as the Fed reinforces rate-cut hopes

Author photo

By

Markets/commodities reporter

Author photo

Deputy markets editor

Gold futures ended higher on Friday to build a gain for the week, after Federal Reserve Chairman Jerome Powell this week did nothing to dispel expectations for an interest rate cut later this month.

The recent dovish comments from the Federal Reserve are “helpful to gold,” said George Gero, managing director at RBC Wealth Management, in daily commentary. “Traders still buy good dips, so gold has seen bargain hunters active [during] each major setback recently.” Gold is likely to see a trading range of $1.400-$1,450 for now, he added.

Gold for August delivery on Comex GCQ19, +0.61%  rose $5.50, or 0.4%, to settle at $1,412.20 an ounce, and prices for the most-active contract tallied a weekly rise of 0.9%, FactSet data show. September silver SIU19, +0.62%  added 9 cents, or 0.6%, at $15.236 an ounce, but logged a 1.6% weekly rise.

Read: Platinum is a bargain hidden behind the rally in palladium and gold

Gold had briefly turned lower in the immediate wake of data Friday morning showing U.S. producer prices rose 0.1% in June, defying expectations for a 0.1% fall. Excluding food, energy and trade margins, core PPI was flat after two straight months of 0.4% gains.

“The combination of Fed Chair Powell’s dovish testimony this week, solidified cut expectations, [U.S. dollar] moves, equity market records, and global uncertainty have, to put it plainly, solidified upside risk” for gold, wrote Christopher Louney, analyst at RBC Capital Markets, in a note.

Powell testified before Congress Wednesday and Thursday. The Fed chief offered no pushback against expectations that policy makers will move to cut rates when they meet July 30-31, with investors penciling in scope for further cuts later in the year.

The U.S. dollar, meanwhile, has seen renewed pressure this week, with the ICE U.S. Dollar DXY, -0.21%  , a measure of the currency against a basket of six major rivals, off 0.2% this week as gold futures settled. A weaker dollar can be a positive for commodities priced in the unit, as it makes them less expensive to users of other currencies.

“Of course, it was Powell not using this week as an opportunity to talk down rate cut expectations, and instead citing that ‘the uncertainties around global growth and trade continue to weigh on t he outlook’ which has solidified the price risks for gold, and our economists now expect the Fed to cut by 25 basis-point in July and have penciled in another 25 [basis-point] cut in September,” Louney said.

The analyst warned, however, that the rally comes with “vulnerabilities,” including the potential for trade tensions to subside, which could erode the metal’s haven appeal.

In other metals trade, October platinum PLV19, +0.35%  added $3.70, or 0.5%, to $834.60 an ounce, with prices up about 2.9% for the week, while September palladium PAU19, -1.21%  was off $16.70, or 1.1%, to $1,542.40 an ounce, suffering a weekly loss of 1.4%.

September copper HGU19, +0.28%  rose nearly a cent, or 0.2%, to $2.694 a pound, with prices marking a weekly rise of 1.2%.

“Going forward, gold remains the most appealing ‘long play’ in the commodity market, while copper is still the single-best indicator for broad market sentiment towards the global economy and very fluid dynamics in the trade war,” said Tyler Richey, co-editor at Sevens Report Research.

Official Chinese data on Friday revealed that the country’s imports fell by 7.3% in June. The data “painted a fairly downbeat picture of its demand for commodities,” said Oliver Allen, assistant economist at Capital Economics. “Given that we expect the Chinese economy to slow further over the coming months, a pick-up in China’s commodities imports looks unlikely.”

Gold’s appeal as a haven investment, however, often gets a boost during times of economic uncertainty.

The SPDR Gold Shares exchange-traded fund GLD, +0.49%  was up 0.3% in Friday dealings, trading 0.8% higher on the week.

Filed in: Top News Tags: 

You might like:

NewsWatch: Seeing America again through new eyes NewsWatch: Seeing America again through new eyes
The Wall Street Journal: Facebook, Wall Street Journal publisher and others reach deal for news section The Wall Street Journal: Facebook, Wall Street Journal publisher and others reach deal for news section
Market Snapshot: Dow ends lower pressured by Boeing, Johnson & Johnson, despite good earnings Market Snapshot: Dow ends lower pressured by Boeing, Johnson & Johnson, despite good earnings
Market Extra: Corporate bonds may be paying too little spread to offset fourth-quarter selloff risks Market Extra: Corporate bonds may be paying too little spread to offset fourth-quarter selloff risks
The MarketWatch Q&A: NBA analyst Stan Van Gundy on how the league has changed: More billionaire owners — and players who are ‘brands’ The MarketWatch Q&A: NBA analyst Stan Van Gundy on how the league has changed: More billionaire owners — and players who are ‘brands’
The Fed: Dimon says money-market turmoil last month risks morphing into a crisis if Fed falters The Fed: Dimon says money-market turmoil last month risks morphing into a crisis if Fed falters
Personal Finance Daily: The most generous country in the world and how much parents should worry about a Johnson & Johnson baby powder recall and arsenic in baby food Personal Finance Daily: The most generous country in the world and how much parents should worry about a Johnson & Johnson baby powder recall and arsenic in baby food
Boeing stock at its lowest in two months after report jet maker may have misled FAA Boeing stock at its lowest in two months after report jet maker may have misled FAA
© 2019 Stock Investors News. All rights reserved. XHTML / CSS Valid.