Gold Prices Tick Higher With Geopolitical Tensions in Focus

By David Hodari Features Dow Jones Newswires

Gold prices gained Monday, extending the advance that followed the Friday release of weaker-than-expected U.S. jobs data.

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The precious metal was up 0.46% at $1,281.93 a troy ounce in midmorning trade.

Copper, meanwhile, was flat at $6,654 a metric ton, with base metals struggling to find direction as Chinese traders caught up from their week of public holidays.

While economists polled by The Wall Street Journal had forecast the addition of 80,000 jobs to the U.S. economy, nonfarm payrolls data revealed that the employment market actually lost 30,000 jobs.

The dollar fell after that news, and that "is presumably the reason why gold gained on Friday," Commerzbank said in a morning note. The WSJ Dollar Index, which measures the currency against a basket of 16 others, dropped 1% after the jobs report Friday and edged down a further 0.01% Monday to 86.94.

That said, "the poor U.S. labor market report is clearly regarded as only a short-term anomaly," Commerzbank added.

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Gold's uptick after the jobs data lifted the metal off a two-month low. In the coming days, gold may find further support from key resistance barriers and ongoing geopolitical risk factors, said Ipek Ozkardeskaya, a senior market analyst at London Capital Group.

Traders were watching events in Catalonia, where the regional government seemed intent on pursuing independence despite pro-Spanish counter-demonstrations over the weekend, Commerzbank said.

Meanwhile, President Trump appeared to once again threaten North Korea on Saturday, tweeting that "only one thing will work" when dealing with the country. This was also contributing to global risk sentiment, bulliondesk.com said in a morning report.

Looking ahead, investors were waiting to see whether continued expectations of a Federal Reserve rate increase would support the dollar or whether ongoing geopolitical risk would buoy gold.

Among precious metals, silver rose 0.59% to $16.92 a troy ounce, platinum rose 0.19% to $917.50 a troy ounce, and palladium rose 0.84% to $930.25 a troy ounce.

Among base metals, zinc rose 0.54% to $3,262 a metric ton, aluminum rose 0.05% to $2,147.50 a metric ton, tin rose 0.83% to $20,775 a metric ton, nickel rose 1.99% to $10,785 a metric ton and lead fell 1.09% to $2,506.50 a metric ton.

Write to David Hodari at David.Hodari@wsj.com

Gold prices rose Monday, as a slew of geopolitical concerns prompted some safe-haven buying.

Gold for December delivery was up 0.6% at $1,282.70 a troy ounce on the Comex division of the New York Mercantile Exchange. Prices have fallen in four straight weeks after hitting their highest level in more than a year, but were bouncing back Monday amid some investor anxiety over possible political turbulence. Many favor gold during times of uncertainty.

The latest vague threat by President Donald Trump of possible military action against North Korea came Saturday on Twitter when Mr. Trump wrote "sorry, but only one thing will work." With North Korea observing a public holiday Tuesday, some have speculated that the country might launch another missile.

Other international tensions have also emerged. The U.S. and Turkey on Sunday stopped issuing nonimmigrant visas to each others' citizens. Protests occurred in Barcelona over the weekend as Spain weights the possible implication of Catalonia seceding after a recent referendum. Iranian officials are refusing to change their nuclear deal signed with six world powers, as Mr. Trump weighs whether to declare that Tehran isn't complying with the accord.

Although investors have recently shaken off geopolitical turbulence, some analysts said Monday's gains also came because prices were due for a rally after the recent selloff.

"The market saw some profit taking Friday," said Ira Epstein, a strategist at The Linn Group. "I see a trading bottom that has formed, not a trend," he said.

"Gold is not seeing an outlook change. If anything, the outlook is getting a bit more bearish," he added.

On Friday, the latest data from the Commodity Futures Trading Commission showed that net bets on higher gold prices by speculative investors fell for the fourth straight week.

Traders were still pondering the implications of Friday's jobs report, which supported expectations that the Federal Reserve will raise interest rates again in December. That hurts the short-term outlook for gold because the precious metal struggles to compete with yield-bearing assets like Treasurys as borrowing costs rise. Increasing confidence among investors that the Fed will stick to its plan for gradual rate increases has weighed on gold recently.

However, some analysts have said that strong average hourly earnings growth could spur bets on higher inflation, which could eventually prove positive for gold. Some investors buy the metal as a hedge against higher consumer prices.

The dollar was slightly higher Monday, making gold more expensive for foreign buyers. The WSJ Dollar Index, which tracks the U.S. currency against 16 others, was recently up less than 0.1% after rising for the fourth straight week.

Among base metals, copper for December delivery inched down 0.2% to $3.0240 a pound. Prices got a boost last week amid concerns that an earthquake in Chile might disrupt supply, but are still off 4.5% from the multiyear highs hit early last month.

Write to Amrith Ramkumar at amrith.ramkumar@wsj.com

Gold prices rose Monday, as a slew of geopolitical concerns prompted some safe-haven buying.

Gold for December delivery closed up 0.8% at $1,285.00 a troy ounce on the Comex division of the New York Mercantile Exchange. Prices have fallen in four straight weeks after hitting their highest level in more than a year, but bounced back Monday amid some investor anxiety over possible political turbulence. Many favor gold during times of uncertainty.

The latest vague threat by President Donald Trump of possible military action against North Korea came Saturday on Twitter when Mr. Trump wrote "sorry, but only one thing will work." With North Korea observing a public holiday Tuesday, some have speculated that the country might launch another missile.

Other international tensions have also emerged. The U.S. and Turkey on Sunday stopped issuing nonimmigrant visas to each others' citizens. Protests occurred in Barcelona over the weekend as Spain weights the possible implication of Catalonia seceding after a recent referendum. Iranian officials are refusing to change their nuclear deal signed with six world powers, as Mr. Trump weighs whether to declare that Tehran isn't complying with the accord.

Although investors have recently shaken off geopolitical turbulence, some analysts said Monday's gains also came because prices were due for a rally after the recent selloff.

"The market saw some profit taking Friday," said Ira Epstein, a strategist at Linn & Associates. "I see a trading bottom that has formed, not a trend," he said.

"Gold is not seeing an outlook change. If anything, the outlook is getting a bit more bearish," he added.

On Friday, the latest data from the Commodity Futures Trading Commission showed that net bets on higher gold prices by speculative investors fell for the fourth straight week.

Traders were still pondering the implications of Friday's jobs report, which supported expectations that the Federal Reserve will raise interest rates again in December. That hurts the short-term outlook for gold because the precious metal struggles to compete with yield-bearing assets like Treasurys as borrowing costs rise. Increasing confidence among investors that the Fed will stick to its plan for gradual rate increases has weighed on gold recently.

However, some analysts have said that strong average hourly earnings growth could spur bets on higher inflation, which could eventually prove positive for gold. Some investors buy the metal as a hedge against higher consumer prices.

The dollar inched lower Monday, making gold slightly cheaper for foreign buyers. The WSJ Dollar Index, which tracks the U.S. currency against 16 others, was recently up less than 0.1% after rising for the fourth straight week.

Among base metals, copper for December delivery swung between small gains and losses and closed up 0.1% at $3.0310 a pound. Prices got a boost last week amid concerns that an earthquake in Chile might disrupt supply, but are still off roughly 4.5% from the multi-year highs hit early last month.

Write to Amrith Ramkumar at amrith.ramkumar@wsj.com

(END) Dow Jones Newswires

October 09, 2017 14:46 ET (18:46 GMT)