Gold logs lowest finish since the start of the year as risk-on sentiment prevails
Gold prices on Monday marked their lowest finish since the first full trading day of the year, finding little haven-related interest as appetite for riskier assets lifts global equities, the U.S. dollar strengthened against the Japanese yen, and bond yields climbed.
“Upbeat trader and investor attitudes” worked against the precious metals markets to start the trading week, said Jim Wyckoff, senior analyst at Kitco.com, in a daily note.
“The U.S.-Iran conflicted has, at least for the time being, died down and the U.S. and China are this week set to sign a partial trade deal, which is likely to stimulate global economic growth in 2020,” he said. However, “the marketplace is keeping an eye on major protesting in Iran following the admission from the Iranian government that its military mistakenly shot down a passenger airliner last week.”
Against that backdrop, gold for February delivery GCG20, -0.72% on Comex fell $9.50, or 0.6%, to settle at $1,550.60 an ounce. That was the lowest finish for a most-active contract since Jan.2, FactSet data show. March silver SIH20, -1.12% lost 10.9 cents, or 0.6%, to $17.996 an ounce.
The U.S. dollar versus the Japanese yen rose 0.4% to trade at 109.918 USDJPY, +0.13% after hitting its highest level against the Japanese currency since late May. A stronger dollar is often seen as a negative for gold and other commodities priced in the unit, making them more expensive to users of other currencies. In addition, the Japanese yen is also seen as arguably the biggest beneficiary of haven flows during bouts of geopolitical uncertainty.
“If the price action on this pair is anything to go by then gold could head in the opposite direction as demand for safe-haven assets drop back with the U.S.-Iran tensions easing,” said Fawad Razaqzada, market analyst at Forex.com, in a note.
“Indeed, gold and the USD/JPY tend to have a strong negative correlation with one another. Gold bugs better hope then that either the negative correlation breaks down or the breakout in the USD/JPY turns out to be a fake one,” he said.
In other metals trading, March copper HGH20, -0.23% rose 1.7% to $2.861 a pound.
April platinum PLJ20, -0.83% fell 0.4% to $982.10 an ounce, while March palladium PAH20, +0.08% edged up by 0.3% at $2,079.10 an ounce. Prices for palladium shook off some earlier weakness to notch another record high.
“The path of least resistance remains up in the palladium market, with general optimism into the US/Chinese trade deal signing likely setting the stage for further new all-time highs,” said analysts at Zaner Metals in a daily note.
Published: Jan 13, 2020 2:20 p.m. ET