Gold finishes lower as stocks rally, dollar strengthens 

Gold futures surrendered earlier gains to finish lower on Thursday as strength in the U.S. stock market and the dollar offset support from a report showing strong investment demand for precious metals in the first half of 2016.

December gold GCZ6, -0.41%  fell $1.90, or 0.1%, to settle at $1,350 an ounce. Prices had traded lower early Thursday, turned higher, then fell back again near the settlement time, trading inversely to moves in the U.S. dollar. Silver for September delivery SIU6, -0.25%  finished at $20.02 an ounce, up 15 cents, or 0.7%.

Among exchange-traded funds, the SPDR Gold Trust GLD, -0.69% lost 0.1% by the time gold prices settled, and the silver ETF iShares Silver Trust SLV, -1.04% shed 0.5%, while the VanEck Vectors Gold Miners ETF GDX, -0.83%  climbed 0.3%.

Movers for the precious metals came on the back of rally in the U.S. stock market Thursday.

Earlier Thursday, gold appeared to be “gaining support from investors who do not believe in the stock market’s rally,” said Michael Armbruster, principal and co-founder at Altavest, told MarketWatch.

But “a simultaneous rally in gold and the stock market” was not likely to persist, he said. “It looks like gold blinked today, but our outlook over coming weeks is still pointed higher. We can’t help but remain skeptical of the stock market’s rally.”

Industry data released overnight showed underlying demand for gold in the face of scant yield in other so-called safety investments.

“The global picture for gold is dominated by considerable and continued investment demand driven by the West as investors rebalance their investments in response to the ever-expanding pool of negative yielding government bonds and heightened political and economic uncertainty,” Alistair Hewitt, head of market intelligence at the World Gold Council, said in response to the latest report.

According to WGC, for the first half the year, investment demand for gold, which includes bars and coins and demand from ETFs, reached 1,063.9 metric tons. That was up 16% from the previous first-half-of-the-year record in 2009 and accounted for almost half of the overall gold demand during the first six months of 2016.

Total gold demand, which includes the metal used in jewelry manufacturing and the industrial sector, reached 2,335 metric tons in the first six months of the year, the group said.

Still, at least in the short term, metals-futures prices were hinged on the dollar’s moves. The ICE U.S. Dollar Index DXY, +0.01%  was trading 0.3% higher around the time gold prices settled. Commodities priced in dollars often trade inversely with the currency, as moves in the U.S. unit can influence the attractiveness of those commodities to holders of other currencies.

The greenback has been underpinned by expectations that U.S. interest rates are headed at least marginally higher, contrasting their global counterparts which are already at record lows and may be heading lower. The rate-policy gap exists even if the Federal Reserve moves slowly to roll back its accommodative monetary stance.

Released Thursday, the latest snapshot from the job market offered some ammunition for the pro-hike camp. Initial weekly jobless benefit claims fell and are now running under 300,000 for 75 weeks, the longest stretch since 1970.

Platinum and palladium remained active Thursday, but gave back a portion of their strong climb on Wednesday. September palladium PAU6, +0.53%  eased $34.60, or 4.8%, to $691.80 an ounce on Comex. The metal’s settlement Wednesday at $726.40 was the highest for futures prices since mid-June 2015, according to FactSet. Its sister metal October platinum PLV6, -0.54%   fell $26.40, or 2.2%, to $1,156.70 an ounce. It settled Wednesday at $1,183.10 an ounce, with prices, based on the most-active contracts, scoring the strongest finish since early March of last year.

Meanwhile, high-grade copper for September delivery HGU6, -0.50%   rose 2 cents, or 0.9%, to $2.191 a pound.

Source: Market Watch

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