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Gold recovers from one-week low as dollar, equities sag

  • Dollar sags as Treasury yields slip back.
  • World stocks stumble off all-time highs.
  • Platinum, palladium hit more than one-week low.
Gold
Source: World Gold Council

Gold prices touched a one-week low overnight before rebounding on Thursday, though the precious metal remained vulnerable to further declines as rallies from the dollar and equities cooled off.

Spot gold was up 0.4 percent at $1,286.31 an ounce by 3:44 p.m. ET, after earlier hitting its lowest since Oct. 9 at $1,276.22. Gold has lost 6 percent since Sept. 8.

U.S. gold futures for December delivery settled up $7, or 0.6 percent, at $1,290 per ounce, hitting $1,277.60, its lowest since Oct. 6.

U.S. jobless claims fell 9 percent during the week ended Oct. 14 to 222,000 from 224,000, the U.S. Labor Department said on Thursday.

A flurry of lackluster corporate earnings reports knocked global stock markets down from a record high on Thursday, while demand for safe-haven assets pushed U.S. Treasury yields lower.

"There's technical reasons why we've stabilized, stocks have come off, (but overall) people are not finding much value investing in gold at the moment," said Fawad Razaqzada, an analyst at FOREX.com.

"The lack of safe-haven demand combined with expectations of higher interest rates is weighing. If gold remains below $1,300, there's a risk of a deeper correction in the coming days or weeks."

The dollar index fell against a basket of six currencies as 10-year Treasury yields dropped.

Federal Reserve Chair Janet Yellen's current term ends in February, and investors are waiting to see if U.S. President Donald Trump will pick a replacement. The White House said a decision would be announced in coming days.

Higher interest rates typically boost the dollar and bond yields, pressuring gold by increasing the opportunity cost of holding non-yielding bullion.

"Fundamentally, the U.S. economy is still doing well, but the worry is that there is not much inflation in the system," said Ryan McKay, commodity strategist at TD Securities in Toronto.

"Without the inflation, the market is expecting that the Fed won't raise rates three times in 2018, as the documents are suggesting, and that would make it more bullish for gold."

Canada's Bank of Nova Scotia is exploring options for its gold business ScotiaMocatta, including a possible sale of the world's oldest gold trader, three sources familiar with the matter said on Wednesday.

Silver rose 1.24 percent at $17.19 an ounce, platinum rose 0.23 percent at $920.15 and palladium was up 0.33 percent at $955.60 per ounce. Platinum and palladium hit one-week lows overnight.