Gold prices took a turn on Tuesday, finally rebounding from a streak of 9-month lows in recent trading sessions, as reflected in our newest gold chart:
Spot gold climbed $10.70 at $1,225.50 an ounce as of 10:30 a.m. EDT. On Monday, gold futures ended three days of consecutive losses, and the uptick continued today. Gold futures for December delivery on the Comex in New York were up $5.00 at $1,222.90 an ounce for a 1.30% gain.
Here's what has put some wind back in gold's sails...
Gold Prices Gaining on These Factors
Of higher Comex gold, RBC Capital Markets Global Futures precious metals strategist George Gero cited a "long-awaited" rally on "short covering and some bargain hunting by the jewelry trade storing for the year-end holidays" to Kitco.
As far as the spot price goes, the U.S. dollar is finally softening from the 14-month highs it's reached over the past week. The Bloomberg Dollar Spot Index - a gauge of the dollar's strength that tracks the greenback against 10 major counterparts - slipped 0.2%, and the dollar fell against its major peers, including the yen.
A weaker dollar drives up the gold price per ounce - it makes dollar-denominated commodities less expensive to buy for holders of other types of currencies.
Additionally stoking yellow metal gains Tuesday were troubling headlines out of the Middle East. Gold, a safe-haven investment, moves when market uncertainty and geopolitical tensions increase.
"Physical gold coins or bars are an unequalled safe haven, due to their liquidity and lack of counterparty risk," Money Morning Resource Specialist Peter Krauth has said. "It is the only liquid, universally recognized form of transportable wealth that is not simultaneously someone else's liability. That's what makes gold so desirable."
This morning, the U.S. and its Arab allies carried out airstrikes against Islamic State militant positions in Iraq and Syria. The Pentagon cited declared intentions by militants in Syria to bring an "imminent" terror attack onto U.S. soil as cause to move forward with airstrikes. When interviewed on ABC's"Good Morning America" this morning, Pentagon spokesman Rear Admiral John Kirby stated he believes the individuals plotting and planning a U.S. attack were eliminated.
"There are a lot of geopolitical worries going around," Barclays Plc.'s wealth-management unit head of equity strategy William Hobbs said to Bloomberg. "The Middle Eastern situation feels like it's not going to go away very quickly. The Islamic State is a significant and very organized military threat."
Additionally, headlines came out this morning that Israel shot down a Syrian jet from its airspace.
"These developments pressured world stock markets and boosted safe-haven gold and U.S. Treasuries," senior Kitco.com analyst Jim Wyckoff said.
Related Articles:
- Kitco: RBC's Gero: Short Covering, Bargain Hunting Boost Comex Gold
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Bloomberg: Dollar Falls with Stocks as Gold Climbs amid Airstrikes - Kitco: Gold Pops Higher as Geopolitics Back in Play
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