Gold surges on elevated geopolitical uncertainty
The metal’s prices jump to highest level in nearly 10 months
Gold prices surged to their highest level in 10 months Tuesday, lifted by haven buying as investors monitored continuing trade talks and political uncertainty in Europe.
Gold for February delivery, the front-month futures contract, climbed 1.7% to $1,340.10 a troy ounce on the Comex division of the New York Mercantile Exchange. The metal posted its highest close since April 19 following its biggest one-day increase since Nov. 1 and has added 4.8% this year, supported by investors seeking safer assets and signs that central banks around the world will be cautious with interest rates moving forward.
Some investors buy gold when they anticipate turbulence in risk assets and slowing global growth, and the metal also becomes more attractive relative to yield-bearing assets like Treasurys when rate expectations moderate.
Although trade talks between the U.S. and China generated positive reactions from analysts last week, many remain cautious about the two sides reaching an agreement that could lift the outlook for the global economy and calm markets. Trade tensions and weak economic figures in Europe have buffeted stocks in recent months and lifted haven assets such as gold.
“Last week’s talk apparently made some progress, but at some point investors would like to see more evidence of what exactly was agreed to,” said Edward Meir, a consultant at brokerdealer INTL FCStone, in a note to clients.
Analysts were also monitoring the dollar, as a weaker U.S. currency makes commodities denominated in dollars cheaper for overseas buyers. On Tuesday, the WSJ Dollar Index, was down less than 0.3%.
Investors were looking ahead to minutes from the Federal Reserve’s last meeting, scheduled for release Wednesday afternoon, for the latest clues on the central bank’s plans for interest rates.
Elsewhere in precious metals, most-active silver futures added 1.4% to $15.967 a troy ounce. Platinum climbed 1.7% to $821, and palladium surged 3.3% to $1,453.90, hitting a fresh all-time high amid supply shortages of the silvery-white metal used in catalytic converters that scrub emissions in gasoline engines.
Among base metals, frontmonth Comex copper futures for February delivery climbed 2.8% to $2.8815 a pound—their highest close since July 3 and largest one-day advance since Jan. 4.
The industrial metal has gotten a boost from signs of Chinese stimulus and an improved trade outlook this year, though it remains well below its June fouryear highs.
On the London Metal Exchange, aluminum for delivery in three months was unchanged at $1,856 a metric ton. Zinc edged up 0.7% to $2,657, tin ended up 0.1% at $21,160, nickel climbed 1.6% to $12,660 and lead finished down 0.4% at $2,021.