Gold futures on Wednesday were heading for another strong gain in 2022 after starting the year on the backfoot. A softer tone for stocks and the U.S. dollar, and a slight retreat in yields, appeared sufficient to give bullion loft.
February gold
GCG22,
GC00,
rose $12.40, or 0.7%, to trade at $1,827 an ounce, following a 0.8% rise on Tuesday. The contract fell at the start of the week to its lowest level for a most-active futures since Dec. 21, FactSet data show.
A gauge of the buck, the ICE U.S. Dollar Index
DXY,
was trading 0.3% lower early Wednesday, while the 10-year Treasury note
TMUBMUSD10Y,
was edging back to around 1.65%.
Strategists said that the commodity market was making its bullish bets on the outlook for gold, amid the spread of the omicron variant of the coronavirus that causes COVID-19, but were eagerly anticipating the minutes from the Federal Reserve’s Dec. 14-15 meeting to glean further clues on the Fed’s tactics for tackling rising inflation.
“The safe-haven metals are getting some support from a bit more risk aversion in the general marketplace at midweek,” wrote Jim Wyckoff, senior analyst at Kitco.com in a Wednesday note.
“Traders are awaiting the U.S. data point of the day, which is this afternoon’s Federal Open Market Committee minutes from the December meeting,” he wrote.
Minutes are set to be released at 2 p.m. Eastern Time, about a half-hour after gold futures trade settles on Comex.
The Kitco analyst said that “February gold futures bulls have the overall near-term technical advantage amid a three-week-old price uptrend in place on the daily chart.”
“Bulls’ next upside price objective is to produce a close in February futures above solid resistance at $1,840,” Wyckoff wrote, adding that bears are looking at a breach of technical support at $1,785 an ounce.
Meanwhile, metals markets didn’t show much of a reaction after ADP reported that private-sector payrolls rose by 807,000 in December, more than double the 375,000 expected by economists. The report comes ahead of the closely watched Labor Department report due Friday.
The official U.S. jobs report is due Friday, with economists looking for the economy to have added a total 422,000 jobs.
The jobs market is of importance for commodity markets because it could impact the Fed’s plans after the central bank in December said it would wind-down its asset purchases by March, with projections showing three interest-rate increases ahead in 2022.
