Gold Slump Steadies As Equities Push Higher

By Glenn Dyer | More Articles by Glenn Dyer

Gold’s big slump steadied in regular trading on Wednesday (but not after some big swings on the day), but then re-emerged in after-hours electronic trading.

Comex futures settled higher on Wednesday, recouping a small portion of the 4.6% drop suffered a day earlier, as US Treasury yields eased from the day’s highs and the US dollar edged lower.

Comex December gold rose $US2.70, or 0.1%, to settle at $US1,949 an ounce. It traded low as $US1,874.20 in the session.

Both bond yields and the greenback are usually among the drivers for gold price movements but their influence didn’t last as selling emerged after-hours running into Asian time on Thursday.

The US Dollar Index meanwhile, traded 0.3% lower as gold futures settled, supporting gold while the 10-year US Treasury bond ended around 0.658%, up from Tuesday’s 0.647% but well under the near 0.70% high for the day.

So by 7 am, the December (front month) contract had lost another nearly $US20 to trade around $US1,9260 an ounce.

That was down 1% on the settlement prices.

The late slide won’t help the share prices of local gold stocks which sold off heavily on Wednesday.

Newcrest shares fell 2.2%, Oz Minerals shares were down 3.5%, Northern Star lost 5.3%, Evolution also shed 5.3%, Saracen lost 4.4% and St Barbara fell 3.8%.

Prices for the yellow metal dropped 4.6% Tuesday, which represented the steepest one-day dollar decline since April 15, 2013, and the steepest percentage slide since March 13 of this year. It fell further in electronic trading across Asia and into Europe.

Judging by the after-hours trade on Thursday, that weakness could continue through Thursday.

Comex September silver lost 7 cents, or 0.3%, at $US25.979 an ounce, after the metal tumbled 11% in the previous session for its sharpest daily dollar fall since September 23, 2011, and largest daily percentage drop since March 16 of this year.

Comex September copper rose 0.5% to settle at $US2.891 a pound.

And iron ore prices were modestly firmer on the day with the price of 62% Fe fines delivered to northern China rising 42 cents to $US121.51.

Meanwhile, equities settled higher at the close of the session on Wall Street after Tuesday’s slide.

The Dow rose 289.93 points, or 1.1%, to end at 27,976.84. The S&P 500 added 44.66 points, or 1.4%, closing at 3,380.35, after briefly trading above its all-time closing high of 3,386.15 set February 19.

Nasdaq bounced back strongly after some weakness earlier in the week and climbed 229.42 points, or 2.1%, to end at 11,012.24.

But the overnight futures market had the ASX starting sharply higher with a gain of around 40 points after Wall Street ended the session higher.

And oil futures rose again to new post-March highs after yet another fall in US stocks.

The Energy Information Administration reported Wednesday that US crude inventories fell by 4.5 million barrels for the week ended August 7. That followed big falls in each of the previous two weeks.

West Texas Intermediate (WTI) crude for September delivery in New York ended up $US1.06, or nearly 2.6%, to settle at $US42.67 a barrel. Wednesday’s settlement marked the highest for a front-month contract since March 5.

In Europe, October Brent crude settled 93 cents, or 2.1%, higher at $US45.43 a barrel also ending at the highest since March 5.

The EIA data also showed crude stocks at the Cushing, Oklahoma, storage hub (for WTI settlement crude) edged up by about 1.3 million barrels for the week, but total domestic oil production saw a weekly fall of 300,000 barrels to an estimated 10.7 million barrels a day.

Glenn Dyer

About Glenn Dyer

Glenn Dyer has been a finance journalist and TV producer for more than 40 years. He has worked at Maxwell Newton Publications, Queensland Newspapers, AAP, The Australian Financial Review, The Nine Network and Crikey.

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