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Gold Prices Rose 0.2% From A Week Low.
- Oct 10, 2018 -

Tencent Securities, Oct. 10, according to MarketWatch, a US financial website, gold futures prices closed slightly higher on Tuesday, rebounding from a week-long closing low set yesterday. Asian major stock markets hovered near 17-month lows on Tuesday, sparking investor tensions, while U.S. Treasury bond yields fell from previous multi-year highs and Europe faced political risks that underpinned gold prices.

Gold futures for December delivery on the New York Mercantile Exchange were trading at $2.90, up 0.2%, to $1,191.50 an ounce. The contract closed Monday at $1188.60 an ounce, the lowest closing price since September 27. Meanwhile, futures for December delivery rose 7.1 cents, or 0.5%, to $14.40 an ounce.

Earlier in the day, it was reported that the U.S. ambassador to the United Nations, Nikki Haley, had abruptly resigned, but she would not leave the United Nations until the end of the year. Jeff Wright, chief investment officer at Wolfpack Capital, an investment firm, said the incident "led to a slight fall in the dollar exchange rate, which I believe has, to a certain extent, stimulated investors'interest in gold as a safe haven and led to short-covering market trading activities, thus contributing to gold price hikes."

The Intercontinental Exchange (ICE) dollar index, which tracks dollar movements against six major international currencies, fell less than 0.1% to 95.708 on Tuesday. But in trading so far this year, the index has risen nearly 4%, pushing gold prices down about 9% over the same period. Usually, rising dollar exchange rates push down the prices of dollar-denominated commodity futures, such as gold and crude oil, because investors in other currencies will have higher costs to buy them; and vice versa.

Meanwhile, the Federal Reserve has raised its benchmark interest rate three times in 2018 and is expected to raise interest rates again in December, a policy stance that could push up Treasury yields and lead to pressure on gold prices. The Fed's interest rate hike could weaken gold's appeal to investors because it is a non-paying asset. At the same time, the Fed's interest rate also tends to push the US dollar up.

Benchmark 10-year Treasury yields briefly hit a seven-year high of more than 3.25% in Tuesday's trading after the U.S. Treasury market closed Monday on Columbus'anniversary of the discovery of the Americas. But then the yield on treasury bonds fell to the US, and the US stock market was mixed. The rise in Treasury yields tends to put pressure on gold as a non-interest-paying asset, but the stock market is also vulnerable to a rise in Treasury yields, which could revive investor interest in gold if there are signs that the stock market will fall rapidly.

In industry news, Granite Shares, an exchange-traded fund, said Monday it had cut the cost of its gold-backed fund. Some practitioners believe the move is expected to intensify the price competition between the fund and competing products from the World Gold Association (WGC) and Perth Mint.