Gold futures climbed Thursday, with prices poised to log their biggest daily gain since March as benchmark U.S. bond yields pull back and rising U.S. tensions with China and Russia boosted the haven metal’s appeal to investors.
Gold also moved up after a series of good reports on the health of the U.S. economy, which provided some support for bullion given the threat of inflation.
The climb in U.S. tensions with China, as well as Russia, “may be encouraging some safe-haven buying” of the metal, said Michael Armbruster, managing partner at Altavest.
Tensions between the U.S. and China over Taiwan have climbed, and the Biden administration on Thursday expelled some Russian diplomats and announced sanctions against dozens of people and companies, partly in retaliation to Russia’s interference in last year’s presidential election.
“The U.S. is talking tough with China and Russia and this may be the first sign that markets are starting to price in a new risk,” Armbruster told MarketWatch. “So far, equity markets are oblivious.”
June gold rose $31.60, or 1.8%, to $1,767.80 an ounce, after declining 0.7% a day ago. That would mark the largest one-day dollar and percentage rise for a most-active contract since early March, FactSet data show.
A closely followed report on U.S. retail sales showed a 9.8% rise in March thanks to $1,400 stimulus checks from the government to consumers, reflecting accelerating economic growth in the aftermath of the COVID pandemic.
“The US retail sales number have strengthened the optimism among traders,” wrote Naeem Aslam, chief market analyst at AvaTrade, in a note.
“In terms of gold price, we have seen more momentum coming as the dollar index loses its strength further because the Fed Chair already informed markets that rates aren’t going higher anytime soon,” he said.
The dollar was steady in Thursday dealings, but tilting lower, at 91.65, as gauged by the ICE U.S. Dollar Index, a measure of the buck against a half-dozen currencies. A stronger dollar can make dollar-pegged assets less appealing to overseas buyers.
Bond yields were pulling back, with the 10-year Treasury trading near 1.60%, reducing some of the friction that rising yields create for investors weighing bonds versus precious metals. While rising yields can make non-yielding bullion comparatively less attractive pit against Treasurys.
Meanwhile, among other metals traded on Comex Wednesday, May silver climbed 1.9% to trade $26.01 an ounce and May copper added 2% to $4.21 a pound.
July platinum climbed by 2.4% to #1,205.10 an ounce and June palladium traded at $2,738.50 an ounce, up 2.2%.
In other economic data, U.S. weekly jobless benefit claims fell by 193,000 to 576,000 in the week of April 10, falling well below economists’ expectations.