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Gold Hits 3-Month Highs, Coasting to 4-Week Rally

Published 10/26/2018, 02:41 PM
Updated 10/26/2018, 02:56 PM
© Reuters.  Gold ends up after a 3-month high and into a fourth week of gains. - Gold hit a three-month high and notched a fourth-straight weekly gain on Friday for its best winning streak since last Christmas into January, as a global rout in equities helped the yellow metal retain its steady and slow climb.

Both spot and futures prices of bullion were also on track to their best monthly gains since January, despite a sharp rally in the dollar this month amid the specter of higher U.S. interest rates. Investors typically view gold as a contrarian bet to the dollar.

U.S. gold futures for December settled at $1,235.80 a troy ounce, up 0.3% on the day and nearly 1% on the week, data from the COMEX division of the New York Mercantile Exchange showed.

The session peak, according to data, was $1,246, which would mark a high since July 8.

The month-to-date gain was about 4%, the highest since January.

Friday's gains in gold were helped by weakness on Wall Street and global equity markets, which were in for their longest losing streak in five years. A softer dollar also lured investors towards bullion.

While the dollar Index, which measures the greenback against a basket of six currencies, was down 0.4% on the day, it was up nearly 1.5% month to date, more than the advance in gold. That made bullion's rally in October even more remarkable, say long-time watchers of the inverse relationship between the two.

"The question now on my mind is 'Is there starting to be a disconnect on the dollar index and the gold price?'" Walter Pehowich, executive president at Dillon Gage Metals in Addison, Texas, asked in his daily outlook on the yellow metal.

"Are the continued geopolitical risk-taking and significant stock market volatility taking a toll on global equities? Are the continued trade wars a factor? Also in a normal market higher interest rates should have put significant pressure on the price of gold and that hasn’t happened," Pehowich added.

While geopolitical tensions such as Saudi Arabia's crisis over the killing of journalist Jamal Khashoggi and the possibility of a Democratic House win in the U.S. midterm elections in November had reestablished bullion as a safe haven of choice, there was also support for gold from ramping Treasury yields and the likelihood of a continued selloff in equities, he said.

In other precious metals trading on COMEX, silver futures gained 0.7% to $14.71 a troy ounce by 2:36 PM ET (18:36 GMT).

Palladium futures rose 0.4% to $1,092.20 an ounce, while sister metal platinum rose 0.5% to $836.00.

Among base metals, COMEX copper rose 0.2% to $2.744 a pound.

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