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Metals Stocks: Gold tallies 4th straight session gain as dollar slumps and corporate earnings get under way

Gold futures end higher Tuesday, gaining support from concerns about weakness in the global economy, as well as corporate quarterly results, due the cessation of business activity intended to stem the spread of COVID-19. Read More...

Gold futures tallied a fourth straight session climb Tuesday, gaining support from concerns about weakness in the global economy, as well as in corporate quarterly results, due to the cessation of business activity intended to stem the spread of COVID-19.

Some weakness in the U.S. dollar also provided a lift to bullion, even as stocks, which tend to move in the opposite direction to haven metals, rose.

“Major corporate earnings reports are now starting to be released, which will show the early impact of the Covid-19 pandemic, and be a sobering reminder of the tough economic times at present,” wrote Jim Wyckoff, senior analyst at Kitco, in a Tuesday research note.

JPMorgan Chase & Co. reported a 69% drop in net income, and a sharp increase in reserves against the prospect of losses among its loans.

Gold for June delivery GCM20, +0.15% on Comex climbed by $7.50, or 0.4%, to settle at $1,768.90 an ounce after hitting an intraday peak at $1,788.80. Tuesday’s settlement and peak were the highest values for a most-active contract since October 2012, according to Dow Jones Market Data.

Ryan Giannotto, director of research at GraniteShares, which offers the GraniteShares Gold Trust BAR, +1.08%, said the “primary factor at work in the gold market” is the U.S. Federal Reserve’s expanded lending and asset purchasing program announced last week.

Read:Fed announces new lending plan it says will provide $2.3 trillion in support for economy

“This latest facility on behalf of the Fed, not only allows the central bank to purchase junk bonds, but it is the largest money printing event in human history,” Giannotto told MarketWatch. “These developments catalyzed gold’s close above $1,700 [and ounce Monday], and the metal is rallying further…the first taste of corporate earnings.”

Gains for precious metals came even as the Dow Jones Industrial Average DJIA, +2.29% and the S&P 500 index SPX, +2.96% rose in Tuesday dealings on the back of signs the spread of the virus has peaked in Europe and is leveling off in the U.S.

Commodity investors also may be focusing on a dim outlook for the economy from the International Monetary Fund, which released its most recent update. The new forecast sees the global economy contracting at a 3% annual rate this year followed by a 5.8% rebound in 2021, representing a deeper recession than during the 2007-09 recession.

“Much worse growth outcomes are possible and maybe even likely,” wrote Gita Gopinath, the IMF’s top economist, in a Tuesday statement.

A softer dollar was buttressing gold as well, commodity experts said. A weaker dollar can make commodities priced in the currency more attractive to users of other monetary units. The U.S. dollar was down 0.4% against a basket of a half dozen rivals, as gauged by the ICE U.S. Dollar Index DXY, -0.44%.

Elsewhere in Comex, the most-active May contract for silver SIK20, +3.62% gained 59.3 cents, or 3.8%, to $16.13 an ounce. May copper HGK20, +1.30% also rose 1.2% to $2.3295 a pound.

July platinum PLN20, +9.25% tacked on 9.3% to $819.70 an ounce and June palladium PAM20, +1.08% fell 0.7% to $2,185.40 an ounce.

Certainly, the platinum group metals markets are “benefiting from news of ongoing mine closures in South Africa, but we get the sense that some big picture safe haven buying has entered the equation this week,” analysts at Zaner Metals wrote in a Tuesday market update.

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