Metals Stocks: Gold prices aim for back-to-back gain as dollar and bond yields retreat

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Gold futures on Thursday headed for their highest close in about a week, extending a climb from Wednesday following the completion of the first stage in a trade pact between the U.S. and China.

“The recovery to this threshold is positive for gold, as it’s showing a healthy appetite for bullion, despite the general risk-on scenario which has followed the signing of the Phase One deal between US and China,” wrote Carlo Alberto De Casa, chief analyst at ActivTrades in a daily research note.

Gold for February delivery GCG20, +0.01%  on Comex edged up $3.30, or 0.2%, at $1,556.80 an ounce, after the metal settled 0.6% higher a day ago. Gold is on pace for its best gain since Jan. 10, according to FactSet data.

March silver SIH20, +0.01%, meanwhile, picked up 4 cents, or 0.2%, at $18.025 an ounce, after gold’s sister metal rose 1.4% on Wednesday.

Gains for bullion come as the Dow Jones Industrial Average DJIA, +0.31%   broke through a 1000-point milestone at 29,000 recently representing a record run for the broader stock market that has been at least partially fueled by Wednesday’s signing of the initial part of multi-level trade agreement between the U.S. and China.

Commodities experts, however, say that gains for the gold are being supported by a weaker U.S. dollar and benchmark government bond yields which have been mostly kept in check, providing a runway for gold to produce a modest rise above a level at $1,550 considered support for the yellow metal.

Yields for the 10-year benchmark note TMUBMUSD10Y, +1.07%  were at 1.78%, while the dollar, as measured by the ICE U.S. Dollar Index DXY, -0.04%  was off about 0.1% at 97.114.

“We are seeing lower volatility again on gold, with the bullion price steady just above the support level of $1,550,” De Casa said.

On top of that investors are betting that the Federal Reserve will keep federal-funds rates anchored at a 1.75%-2% range in 2020, which also may offer more reason for gold and other precious metals, which don’t bear a yield, to advance. Expectations for lower rates for a longer period, also have boosted the equity markets, resulting in a tandem runup for stocks and gold, which usually move in opposite directions.

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