Gold inches higher to kick off action-packed week
Gold prices inched higher Monday, with many investors awaiting news later in the week that could swing prices.
Gold for December delivery closed up 0.5% at $1,277.70 a troy ounce on the Comex division of the New York Mercantile Exchange. Price moves have been relatively muted lately since gold last breached $1,300 Oct. 16, with some analysts noting that news later in the week could give the market more direction.
On Wednesday, the Federal Reserve is scheduled to release its latest statement following a two-day meeting that could offer clues about its outlook for interest rate increases moving forward. Gold struggles to compete with yield-bearing assets like Treasurys as borrowing costs rise. Additionally, President Donald Trump is expected to announce his nominee to be the next Fed chair this week. The Wall Street Journal reported that Mr. Trump is expected to nominate Fed governor Jerome Powell as his nominee.
Investors will also be paying attention to Friday’s monthly jobs report for the latest reading on the U.S. economy, which could affect expectations for future rate increases. Signs of inflation could also boost gold prices because some investors use the precious metal as a hedge against higher consumer prices.
“There’s some interest coming back into [gold] down at these levels,” said Bob Haberkorn, senior market strategist at RJO Futures. “There’s a reluctance down here for the bulls to take anything off,” he said, noting that Mr. Powell would likely continue the Fed’s current approach of slowly raising rates.
The events later in the week could also swing the dollar, which inched lower Monday to make gold and other dollar-denominated commodities cheaper for foreign buyers. The WSJ Dollar Index, which tracks the U.S. currency against a basket of 16 others, was recently down 0.2% coming off its best week of the year.
Many prominent members of the metals market are in London this week for London Metal Exchange week. The exchange said Monday that it is planning to launch futures contracts for battery metals such as lithium and cobalt sulfate as early as the start of 2019, the latest example of how the commodities market is hoping to capitalize on the push toward electric vehicles.
Base metals like copper and nickel could also benefit as the transportation industry change, analysts have said, because of the added demand from batteries and charging infrastructure. Copper for December delivery swung between small gains and losses and closed up 0.3% at $3.1120 a pound. The industrial metal snapped a four-week winning streak last week but still sits near three-year highs.