Gold futures headed higher Wednesday, on track to notch their first gain in three sessions, with support from some safe-haven buying, amid developments in Europe that suggest a longer lockdown period due to a renewed spread of COVID-19.
Gold for April delivery
rose $10.80, or 0.6%, to trade at $1,735.90 an ounce. On Tuesday, it shed 0.8% and posted the lowest settlement for a most-active contract since March 12, FactSet data show.
Germany is expected to extend its lockdown to limit the spread of coronavirus to mid April, rattling investors who fear that such a move will weigh on the region’s rebound from the pandemic.
“With rising Covid cases in Europe unnerving the global financial markets, gold is rising on safe haven inflows,” wrote Sophie Griffiths, market analyst at Oanda, in a daily research note.
On Tuesday, gold investors showed little reaction to the first of two days of congressional testimony from Federal Reserve Chairman Jerome Powell and Treasury Secretary Janet Yellen on the health of the U.S. economy as America wrestles with the impact of the COVID-19 pandemic.
Fed members have been “firm on the inflation concern, indicating any inflation this year will be temporary and that is bearish for gold,” said James Hatzigiannis, chief market strategist at Ploutus Capital Advisors. “The Fed and Powell have indicated time and time again they are not worried about inflation this year and [are] more concerned of getting the economy back running strong again.”
In reaction to the U.S. durable goods orders data Wednesday, which showed a fall of 1.1% in February, gold prices briefly pared their gains then recouped them about a half hour later.
Meanwhile, separate data showed that the U.S. economy grew faster in early March, with the IHS Markit’s flash service index climbing to an 80-month high of 60 from 59.8 in February. The data prompted gold to temporarily give up much of its gains.
In other Comex metals trading, May silver
traded 0.5% higher at $25.36 an ounce, after a 2.1% loss Tuesday, while May copper
was down by less than 0.1% at $4.08 a pound. April platinum
tacked on 0.5% to $1,181 an ounce and June palladium
traded at $2,365 an ounce, up 0.7%.