Gold futures on Wednesday climbed to the highest level since June as a decline in Asia’s equity market and volatility in the U.S. stock market fueled appetite for so-called haven assets.
Prices for the yellow metal saw “more safe-haven buying interest amid a still very wobbly U.S. stock market,” said Jim Wyckoff, senior analyst at Kitco.com. Gold is “now closing in on psychological resistance at the $1,300.00 level, which if cleared would attract even more buyer interest.”
On Comex, February gold gained $2.80, or 0.2%, to settle at $1,284.10 an ounce. That was its highest settlement since the middle of June, though well below the session’s high of $1,291, according to FactSet data. On Monday, gold notched a roughly 2% drop for 2018, but ended up 4.6% in December and 7.2% higher over the last three months of the year.
March silver also rose 0.7% at $15.649 an ounce. Silver closed out Monday’s action down 9.4% year to date but gained 9.4% in December and locked in a quarterly return of 5.7%.
Most major markets were closed on Tuesday for New Year’s Day.
Global equities were reacting “negatively to more weak economic data coming out of China, the world’s second-largest economy,” Wyckoff said. Asian stock markets tumbled Wednesday, while U.S. benchmark stock indexes were trading higher as gold futures settled, following broad losses early in the session.
The China Caixin manufacturing purchasing managers index fell to 49.7 in December, according to data released Wednesday, marking the first time the sector has been in contraction territory—below 50—since May 2017. A reading below 50 signals contraction.
That has helped bullion get off to a buoyant start for 2019 as continued worries about economic expansion undercuts appetite for assets perceived as risky. Volatility in stocks in the latter part of 2018 helped to support demand for havens, after the Dow Jones Industrial Average registered its worst monthly and yearly losses since 2008.
“2019 is already getting off to a volatile start and we expect to see the political and economic uncertainty of 2018 continue and deepen, which will support gold,” said Mark O’Byrne, research director at GoldCore. “We are positive on gold in January and in 2019 as the market backdrop looks very supportive.”
Meanwhile, the Federal Reserve, which has hiked interest rates nine times since the end of 2015, is expected to moderate the pace of further rate increases — a scenario that experts say could provide further support to prices of precious metals, which don’t offer a yield.
The exchange-traded fund SPDR Gold Shares fell by nearly 0.1% and the miner-focused VanEck Vectors Gold Miners ETF shed 0.4%. The iShares Silver Trust rose 0.7%.
Among other metals traded on Comex, March copper fell 0.3% to $2.623 a pound. April platinum rose 0.4% to $804 an ounce and March palladium added 0.1% to $1,198.80 an ounce.