Gold prices finished a few cents higher on Wednesday, extending their streak of gains to a fourth session by a hair, as the U.S. dollar failed to rebound much from 10-month lows as prospects for more U.S. interest-rate hikes this year weaken.
edged up by a dime to settle at $1,242 an ounce, after trading between $1,235.10 and $1,243.50. The contract held ground at its highest finish since July 30, according to FactSet data. It’s tallied a climb of roughly 2% over the past three sessions.
The ICE U.S. Dollar Index
which compares the buck against a half-dozen other currencies, was up 0.2% at 94.759, but was down 0.4% week to date. The WSJ Dollar
which looks at the currency against a wider basket of rivals, was little changed at 86.95 Wednesday.
“A main bullish input for the precious metals markets has been a seriously eroding U.S. dollar index. The dollar bears have the solid overall near-term technical advantage amid a price downtrend that has been in place all year long,” said Jim Wyckoff, senior analyst at metals trading firm Kitco.
Gold churned in a narrow intraday range after housing data hit. Builders broke ground on more homes in June, and figures from a prior month were revised up, allaying some fears that the housing recovery had stumbled in the spring.
The data offer another piece of the economic puzzle that could support or refute the likelihood for a dollar-supportive U.S. rate hike in the second half of 2017, once nearly a foregone conclusion but lately looking less likely amid a mixed bag of economic data.
“Given the continued weakness of core inflation, we now expect the Fed to delay the next interest rate hike until December,” analysts at Capital Economics said in a note released Wednesday. “Accordingly, while there is a chance that the statement following next week’s FOMC meeting will be used to announce the start of balance sheet normalization in September. We don’t expect any hints that a rate hike is imminent.”
The dollar weakened early this week but stocks only briefly paused their march to fresh records as stumbles in getting a health-care bill passed amplified doubts about President Donald Trump’s ability to get passage of traditionally Wall Street friendly changes, including tax cuts and other laws that may boost the buck. Stocks tested new records again Wednesday, a factor that held back haven gold.
A weaker dollar tends to be supportive to commodities, like gold, priced in the currency, making them more attractive to buyers using weaker monetary units.
Among other metals, September silver
rose 2.9 cents, or 0.2%, to $16.297 an ounce.
Silver bears still have the overall near-term technical advantage, however there are early chart clues that a near-term market bottom is in place, Wyckoff said. He pegged the next upside target at a close above solid technical resistance at $17 and the next downside price breakout objective for bears at a close below $15.