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Metals Stocks: Gold ends higher, but stays below the key $1,800 mark

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Gold futures ended higher on Wednesday, finding support from weakness in the U.S. dollar and a retreat in Treasury yields, but prices remained below the key $1,800 mark for a second straight session.

Gold has “met some resistance” at $1,800 and is having difficulty pushing through, Jeff Wright, chief investment officer at Wolfpack Capital, told MarketWatch.

“If the Democrats reach agreement amongst themselves on the mega social spending bill, then gold could see some interest if the U.S. dollar drops,” he said. But to date, the dollar has been “fairly solid as 10-year bond yields have held above 1.5% recently.”

“Unless safe haven interest develops, I am not optimistic gold will push through $1,800 and see more leverage to downside after last week’s move up,” said Wright.

December gold
GCZ21,
+0.34%

 
GC00,
+0.34%

rose $5.40, or 0.3%, to settle at $1,798.80 an ounce after briefly touching a high of $1,800 during the session. Prices saw a 0.7% fall on Tuesday. Silver futures for December delivery
SIZ21,
+0.51%

SI00,
+0.51%

was also up 10 cents, or 0.4%, at $24.191 an ounce.

Some buying was being seen in precious metals as U.S.-China tensions were seen flaring up. China’s biggest telecom operator, China Telecom, was being blocked from doing business in the U.S., after the  U.S. Federal Communications Commission voted Monday to revoke and terminate a unit of the Chinese company, citing  “significant national security and law enforcement risks.”

Against that backdrop, the 10-year Treasury yield
TMUBMUSD10Y,
1.526%

was down to around 1.529%, the U.S. dollar was 0.2% lower, as measured by the ICE U.S. Dollar Index
DXY,
-0.20%
.

Weakness in the U.S. dollar and the lower yields are usually supportive for gold, which recently drifted up to around the $1,800 for the first time in six weeks as concerns about out-of-control inflation helped to boost bullion values.

Tuesday’s pullback for gold was blamed on profit taking, but Jim Wyckoff, senior analyst at Kitco.com on Tuesday suggested that conditions supportive for gold, including uncertainty about the economic outlook due to COVID-19, remain in place to at least keep declines for the precious metal in check.

In U.S. economic reports, a reading of durable-goods orders for September fell 0.4%, less than estimates for a 1% decline. “Core” durable goods order, excluding items like aircrafts, climbed 0.8% in September.

In other metals trading, December copper
HGZ21,
-2.02%

lost nearly 2.2% to $4.39 a pound.

“The trend in copper is still bullish as futures trade just off multi-month highs,” analysts at Sevens Report Research wrote in Wednesday’s newsletter. “However, it will likely take a bullish demand-side catalyst from economic data to support a rally towards $5.00, which would be a new record high.”

“Bottom line, whether it is driven by supply concerns, the strong market action in copper is an encouraging macro signal,” they said.

Rounding out action on Comex, January platinum
PLF22,
-1.46%

shed 1.3% to $1,019.30 an ounce and December palladium
PAZ21,
-2.23%

settled at $1,974.30 an ounce, down 1.5%.

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