Gold prices ended the U.S. day session with good gains Tuesday, in a choppy affair that saw prices trade on both sides of unchanged. The precious metal was boosted by a depreciating U.S. dollar index that hit a seven-week low today. December Comex gold was last up $9.00 an ounce at $1,357.20. September Comex silver was last up $0.038 at $19.88an ounce.
The precious metals markets were supported on this day by bullish “outside markets.” The U.S. dollar index traded solidly lower partly due to a San Francisco Fed study that said the Fed’s U.S. inflation target could be raised. Such would allow the Fed to keep interest rates lower for longer and also suggests the Fed is worried about the growth rate of the U.S. economy in the coming months or few years.
There was an important batch of U.S. economic data released Tuesday, including the consumer price index, new residential construction, and industrial production and capacity utilization. The capacity utilization and industrial production report was stronger than expected and did temporarily push gold prices below unchanged, before they made a steady climb to end the day session Tuesday.
TD Securities looks for any downward correction in gold to be contained and for safe-haven buying to continue. The metal has risen sharply this year but has been range-bound lately, with market worries about potential Federal Reserve rate hikes returning, causing some funds to liquidate positions, TDS says. “Still, the risk of an equity correction and negative yields for some $13 trillion worth of fixed-income assets should see safe-haven interest in gold continue,” TDS says.
This suggested that traders saw a 55 percent chance for the Fed to raise rates in December, up from 42 percent on Monday.
Reference: Reuters, KITCO
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