Gold futures ended higher on Wednesday, rebounding from their lowest levels of the year, as a rally in stocks that took two of the three main U.S. equity indexes to records cooled, providing support for the haven metal.
However, a perky dollar — hovering around its highest level in about 22 months— kept prices for the metal off the session’s high.
Gold for June delivery GCM9, -0.23% rose $6.20, or 0.5%, to settle at $1,279.40 an ounce. The most-active contract settled at its lowest levels since about Dec. 26 a day earlier, according to FactSet data. The yellow metal had now posted gains in two of the past seven sessions.
Metals were recently been under pressure as stocks have mounted a steady climb to records since a selloff late last year, with the S&P 500 indexSPX, -0.22% and the Nasdaq Composite Index COMP, -0.23% registering all-time peaks for the first time in months on Tuesday. However, equities headed lower as gold futures settled Wednesday.
Meanwhile, the ICE U.S. Dollar Index DXY, +0.47% a key gauge of the greenback against six major rivals, was up 0.4% at 97.987, trading at its highest since June 2017. A stronger U.S. unit can make buying the buck-pegged commodity comparatively more expensive for investors using other currencies.
“With the dollar churning higher and rates holding the most-recent rebound (back to the pre-March Fed meeting levels), the bullish case for gold has weakened significantly,” said analysts at Sevens Report Research, in a note. “Near term, further declines can be expected as the [fourth quarter 2018] rally unwinds. But on a longer time frame, nothing has changed as gold has been pinned in a trading range between roughly $1,150 and $1,350 since 2016.”
The recent bout of weakness in gold has made some assets pegged to the precious asset appear more attractive, one market technician said. “Gold stocks are starting to look appealing again after sharp drops down to areas of technical support. This area has some appeal from a countertrend perspective,” wrote Mark Newton, technical analyst and founder of Newton Advisors.
The GDX “has also shown some evidence of downside exhaustion after moving lower for the last 8 of 9 sessions,” Newton said in a Wednesday note.
Among other metals, May silver SIK9, -0.17% added 12.5 cents, or 0.9%, to $14.916 an ounce, while May copper HGK9, -0.02% rose 0.6% to $2.91 a pound. July platinum PLN9, -0.17% edged 0.6% lower to $888.60 an ounce, while June palladium PAM9, -0.09% climbed 2.1% at $1,405.10 an ounce.