Metals Stocks: Gold prices rise for a second session

Gold prices headed higher Wednesday for a second session, as economic stimulus measures boost demand for the precious metal against the backdrop of economies attempting to reopen from the COVID-19 pandemic.

“We are seeing with both gold and silver is precious metals continuing to respond positively to central bank and government stimulus, particularly [Federal Reserve Chairman Jerome Powell’s] recent comments about using all the tools at his disposal,” said Colin Cieszynski, chief market strategist at SIA Wealth Management.

During testimony to the Senate Banking Committee Tuesday, Powell said “we need to be prepared to act further and I would say we are, if the need is there.”

“As hard currencies, gold and silver continue to be seen as a store of value in a time when central bank stimulus programs are increasing the supply and reducing the value of paper currencies,” Cieszynski told MarketWatch.

Gold for June delivery on Comex


headed $7.10, or 0.4%, higher to $1,752.70 an ounce after trading as high as $1,757.60. A settlement above $1,756.30 for the most active contract would be the highest since mid-April, according to FactSet data.

“We think gold’s performance of late reflects growing inherent strength,” wrote Joni Teves, strategist at UBS, in a Tuesday note. “Despite fluctuations in risk sentiment in the interim and significant policy easing largely expected, strategic diversification into gold remains warranted as real rates are likely to remain negative for a prolonged period,” the strategist wrote.

Later in the day, an account of the Federal Reserve’s April 28-29 policy-setting meeting may provide more insights about the prospects for negative interest rates, which would be a boon for precious metals. The Fed’s meeting minutes will be released at 2 p.m. Eastern, a half-hour after metals trading on Comex settles.

Gold futures had posted a decline on Monday after a report from Moderna pointed to progress with an experimental vaccine for the novel strain of coronavirus that has infected nearly five million people globally. However, a report from STAT News on Tuesday raised some doubts about the prospective remedy for the viral outbreak, providing some lift for bullion.

“Speculators do blow things out of proportion the moment they get any news about a coronavirus vaccine,” wrote Naeem Aslam, chief market analyst at AvaTrade, in a Wednesday note. “But, when the optimism fades and reality becomes apparent, investors are left with no option but to hedge their bets,” he wrote.

Meanwhile, Teves pointed to growing appetite for silver. “Silver ETF inflows have remained strong, suggesting retail interest is intact,” she wrote.

On Comex Wednesday, July silver

rose 15.4 cents, or 0.9%, to trade at $18.055 an ounce, following a 2.5% Tuesday.

A popular exchange-traded fund for silver, the iShares Silver Trust
was up 4.7% so far this week, while the SPDR Gold Shares

is up 0.2%.

Among other metals, July copper

added 0.4% to $2.428 a pound. July

tacked on 5.8% to $940 an ounce, while June palladium

rose 4.1% to $2,160 an ounce.

In a report issued this week, Metals Focus said it expects palladium to rally in the second half of this year as “stimulus-driven demand recovery restores market tightness.” It forecasts a 2020 price average for the metal of $2,275, which would mark a year-over-year rise of 48%.