Gold falls from 6-year high as risky assets rally; silver climbs toward a fresh 3-year peak


Gold futures retreated Wednesday, pulling back from a six-year high, after global equity markets rebounded amid signs that tensions in Hong Kong — a source of global anxieties — were momentarily easing. Silver prices, however, extended gains to the highest for the white metal in about three years.

December gold

GCZ19, +0.01%

gave up $1.10, or nearly 0.1%, to trade at $1,554.80 an ounce, after surging 1.7% Tuesday on Comex, the highest finish since April 2013, according to FactSet data. That was the first gain for the most-active contract in four sessions.

Silver for December delivery

SIZ19, +1.37%,

meanwhile, rose 18.3 cents, or 1%. to $19.42 an ounce, extending its 4.9% gain from Tuesday and marking its highest level since Sept. 26, 2016, when the metal settled at $19.60 an ounce.

“Silver is still playing catch-up with gold and trading in very heavy volume,” said Rhona O’Connell, head of market analysis, EMEA and Asia regions, at INTL FCStone.

Read: Silver rally is stealing the show even as gold surges to 6-year high

“It looks as if it is massively overbought and cannot have the energy to push further. It may well have this energy, however,” she said, noting that it’s “perfectly possible to postulate that silver can clear $20” an ounce.

For now, upbeat developments in Asia have helped underpin buying in risky assets and away from those perceived as havens, such as gold.

Equity markets in Hong Kong

HSI, +3.90%

jumped by the most in a day since November after the city’s chief executive, Carrie Lam, said she would formally withdraw the extradition bill that sparked monthslong demonstrations that have hurt the territory’s economy and threatened to disrupt global financial markets.

“Gold has been on a steady run up from $1,400 since the beginning of August, reflecting ongoing worries about political risks and the fear that both the U.S. and Chinese economies will slow down going into 2020,” said Fiona Cincotta, senior market analyst at City Index.

In the U.S., the Institute for Supply Management’s manufacturing index on Tuesday fell to 49.1% in August from 51.2% in July, marking the first contraction in the index in 35 months. Any reading below 50% indicates worsening conditions.

A firm retreat in the U.S. dollar Wednesday likely helped to limit losses for gold. A measure of the buck, the ICE U.S. Dollar Index

DXY, -0.52%,

a gauge of the U.S. unit against a basket of a half-dozen currencies, was down 0.5% at 98.517. A weaker dollar tends to make gold and other dollar-priced metals more attractive to buyers using other currencies.

Given the dollar’s softness, some strategists predicted that gold’s retreat is likely momentary, and forecast the metal to soon occupy a perch at or above $1,600 an ounce.

“The fact is that the [Federal Reserve’s rate-setting Federal Open Market Committee] is divided in terms of their next monetary policy move, while investors have already priced in another interest rate cut,” said Naeem Aslam, chief market analyst at TF Global Markets Ltd, in a daily research note. “The U.S. economic data is going to continue to suffer from trade war and as long as this remains as a main denominator, we believe that gold can easily cross the 1600 mark in the next few weeks,” he said.

Other metals traded on Comex headed higher, with December copper

HGZ19, +2.49%

 up 6.4 cents, or 2.5%, at $2.5915 a pound. October platinum

PLV19, +3.40%

 added $27.80, or 2.9%, to $983.20 an ounce and December palladium

PAZ19, +1.29%

 rose $13.50, or 0.9%, to $1,548.70 an ounce.


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