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Metals Stocks: Gold futures rise amid ‘uncertainty and anxiety’ in the marketplace

Gold futures climbed on Wednesday, staging a tenuous rebound from losses in the previous session, buoyed by uncertainty around the impact of the omicron variant of coronavirus, as the dollar weakened, but yields for government bonds rose.

Gold has rebounded, although it has been held back after Federal Reserve Chairman Jerome Powell’s hawkish remarks on Tuesday, said Fawad Razaqzada, market analyst at ThinkMarkets.

Powell on Tuesday surprised market participants by testifying in front of a Senate Banking Committee that speeding the tapering of monthly asset purchases when policy makers meet later this month could be warranted amid the new strain of the coronavirus.

Powell was slated to deliver a second day of testimony before lawmakers on Wednesday. Monetary policy makers meet on Dec. 14-15 for their final rate-setting gathering of 2021.

Razaqzada said Powell’s remarks on Tuesday “were already priced in by the market and the Fed is always behind the curve anyway.”

““Powell’s remarks were already priced in by the market and the Fed is always behind the curve anyway.””

— Fawad Razaqzada, ThinkMarkets

The Fed chairman said the central bank “consider wrapping up the taper of our asset purchases… perhaps a few months sooner,” as the threat of persistently higher inflation has grown and that it is time to retire the word “transitory.”

“Yields spiked on the back of his comments and the dollar surged back higher, gold dumped to a fresh weekly low, and stocks that carry low dividend yield in the technology sector slumped,” said Razaqzada, in a market update. But on Wednesday, “all those moves were reversed amid a firmer tone towards risk.” U.S. benchmark stock indexes traded broadly higher Wednesday.

The most active February gold contract
GCG22,
+0.67%

GC00,
+0.67%

was trading $15, or 0.8%, higher at $1,791.50 an ounce, following a 0.5% decline on Tuesday, which contributed to a monthly decline of 0.4% in November, according to Dow Jones Market Data.

Silver futures extended their loss from Tuesday, however, with the March silver contract
SIH22,
-0.72%

down 10 cents, or 0.4%, at $22.715 an ounce.

Financial markets have been whipsawed by concerns about the omicron variant, which may have caused some selling of safe-haven metals, presumably, to meet margin calls.

“There remains a bit of safe-haven demand for the precious metals as there is still some uncertainty and anxiety in the marketplace,” said Jim Wyckoff, senior analyst at Kitco.com.

On Wednesday, the dollar was trading slightly lower, as gauged by the ICE U.S. Dollar Index
DXY,
-0.09%
,
which was at 95.703. Meanwhile the 10-year Treasury note yields
TMUBMUSD10Y,
1.490%

around 1.474%, up from 1.44% at 3 p.m. Eastern Tuesday.

Richer yields can undercut appetite for bullion. Moves in the dollar can also influence gold because the metal is traded in the greenback.

Meanwhile, in economic data, Automatic Data Processing Inc.
ADP,
+0.16%

indicated that private-sector employers added 534,000 jobs in November, better than a median forecast of 506,000 from economists surveyed by Dow Jones but down from the previous reading in October of 571,000.

Gold prices continued to trade higher after a key index of U.S.-based manufacturers rose to 61.1% in November from 60.8% in the prior month, according to the Institute for Supply Management. That matched the forecast of economists polled by The Wall Street Journal.

Among other metals traded on Comex, March copper
HGH22,
+0.28%

tacked on 0.7% to $4.309 a pound. January platinum
PLF22,
+1.90%

added 1.6% to $941.70 an ounce and March palladium
PAH22,
+1.44%

traded at $1,734 an ounce, up 1.7%.

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