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Gold futures inch higher, but finish below highest intraday level in past week

Gold futures inched higher on Wednesday, but finished below the intraday high which was the highest level since last week, as investors watched developments with the omicron variant of the coronavirus and awaited U.S. inflation data due out at the end of the week.

There’s “no real safe haven demand” at the moment, given that U.S. President Joe Biden and Russian President Vladimir Putin discussed the Ukraine crisis, but “nothing changed,” Jeff Wright, chief investment officer at Wolfpack Capital, told MarketWatch.

“The recent risk appetite in equity markets have stifled momentum for gold in near term,” he said. Gold has had “multiple chances” to break through and hold $1,800, but failed once again.

Wright said he’s focused on the U.S. consumer price index data due Friday, as well as the Federal Reserve meeting on monetary policy on Dec. 14 to Dec. 15. “The gold market is looking for more clarity” on the rate of the Fed’s tapering of asset purchases and “to also pinpoint timing of interest rate increases in 2022.”

On Wednesday, the most-active February gold contract
GCG22,
+0.09%

 
GC00,
+0.09%

tacked on 80 cents, or less than 0.1%, to settle at $1,785.50 an ounce. The contract traded as high as $1,794.30 in Wednesday dealings, the highest intraday level for a most-active contract since Dec. 1, according to FactSet data. Prices rose 0.3% on Tuesday to mark the highest settlement since Nov. 26.

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Meanwhile, March silver SIH22 ended 9 cents, or 0.4%, lower at $22.432 an ounce, after rising 1.2% on Tuesday.

“Gold seems to be finding difficulty in achieving any momentum in either direction,” and prices around the $1,780 level looked like a magnet” in Wednesday dealings, said Ross Norman, chief executive officer at Metals Daily. “Being early December, markets are quite thin and it does follow that we get moves that are counter-intuitive and this relates to some book-squaring ahead of year end.”

But also ahead of year end, “traders will be considering whether there are prospects for deeper lockdowns as the omicron variant spreads,” he told MarketWatch. “This would not be a good time to be short gold.” 

“Traders will be considering whether there are prospects for deeper lockdowns as the omicron variant spreads. This would not be a good time to be short gold.” 


— Ross Norman, Metals Daily

Pfizer
PFE,
-0.47%

and BioNTech SE
BNTX,
-2.41%

said Wednesday a third dose of their COVID-19 vaccine neutralized omicron in preliminary lab tests, but that a two-dose regimen was much less effective.

The report comes as investors fret about the effectiveness of treatments and vaccines against the new variant of the coronavirus, which scientists fear can elude remedies due to its mutations on the spike protein, the target sight for most vaccines.

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Concerns about the pandemic have helped to buttress gold prices, but the commodity has been checked by anticipation that the Fed Reserve will take a more aggressive approach in tightening monetary policy, which would weigh on yield-sensitive gold.

Yields on Wednesday rose above 1.5% for the 10-year Treasury note
TMUBMUSD10Y,
1.510%
,
but the U.S. dollar, as measured by the ICE U.S. Dollar Index
DXY,
-0.49%
,
edged down by 0.5%, providing some ground for gold, and other precious metals priced in the currency, to gain.

The moves in Treasury yields and the dollar, the pandemic, and the Fed, have led to a volatile trading environment. Choppy markets can provide a floor for bullion.

But “right now, it is difficult to find a direction for the precious metal, with markets remaining volatile,” wrote Ricardo Evangelista, senior analyst at ActivTrades, in a daily research note.

In other Comex dealings, March copper
HGH22,
+1.00%

tacked on 1.2% to $4.321 a pound. January platinum
PLF22,
+0.62%

rose 0.6% to $955.90 an ounce, while March palladium
PAH22,
+0.38%

settled at $1,852.40 an ounce, up 0.3%.

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