Gold futures tallied a gain on Thursday, for a second session, as some experts foresee a lower-for-longer, interest-rate regime buttressing the yellow metal, even as anxieties around a novel strain of coronavirus in China appeared to ebb.
“While safe-haven demand for gold may fade as the coronavirus outbreak is brought under control, the yellow metal also has fundamental support from low real rates, which reduce the opportunity cost of holding gold, and is likely to benefit if the US dollar weakens as we expect,” wrote a team at UBS led by Mark Haefele, global chief investment officer, in a Thursday research report.
Gold for April delivery GCJ20, +0.44% on Comex added $7.20, or 0.5%, to settle at $1,570 an ounce, after rising 0.5% in the previous session.
March silver SIH20, +1.21% rose 21.6 cents, or 1.2%, to $17.818 an ounce, after settling 0.2% higher on Wednesday.
The modest gains come as stocks in the U.S. were on track for a fourth straight gain, after China announced it would halve tariffs on $75 billion of U.S. imports, starting next week, following the signing of the phase one U.S.-China trade deal in January.
The tariff reductions come as coronavirus has claimed at least 565 lives and infected more than 28,000 people, according to China’s National Health Commission.
“While stocks are hitting new all-time highs and bond yields are moving…investors remain wary of the broader macroeconomic backdrop for the financial markets, and gold is still a favorite safe haven destination for capital,” said Tyler Richey, co-editor at Sevens Report Research. “Part of the reason for that is the technical set up for gold prices as futures broke out to new multiyear highs last year shifting the long-term trend in favor of the bulls.”
“If there is a slowdown in the Chinese economy, that will surely dampen the demand prospects for physical gold,” he told MarketWatch. “However, a slowdown in the Chinese economy would weigh significantly on the global economic outlook and rising recession risks would lead to a continued flight-to-safety trade that would benefit gold.”
Meanwhile, global gold-backed exchange-traded fund holdings climbed to fresh all-time highs in January, according to the World Gold Council. Global gold-backed ETF and similar products added 61 metric tons in January, across all regions, to an all-time high of 2,947 metric tons, the WGC reported Thursday.
On Thursday, the SPDR Gold Trust GLD, +0.57% added 0.6%, but was trading lower for the week.
Values for gold had edged back slightly Thursday morning but then resumed an advance after a report on U.S. initial jobless claims declined by 15,000 to 202,000 in the seven days ended Feb. 1, the government said Thursday. Economists polled by MarketWatch had forecast a 215,000 reading. Separately, a report on American workers productivity showed the fastest annual pace of gains in nine years, and productivity snapped back with a 1.4% increase in the fourth quarter after a small decline in the autumn.
Among other metals, March copper HGH20, +0.76% rose 0.7% to $2.5973 a pound. April platinum PLJ20, -2.21% fell by 2% to $967.40 an ounce and March palladium PAH20, -3.91% shed nearly 3.9% to $2,237.20 an ounce.
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