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Metals Stocks: Gold logs back-to-back gains to start July, second half of 2021

Gold futures finished higher Thursday, supported by opportunistic buying and an unwind of short bets overnight, amid a rise in the dollar to a three-month high, which was pared earlier in the session.

“Gold and silver prices are modestly up in early U.S. trading Thursday, on some short covering in the futures markets and perceived value buying in the cash market,” wrote Jim Wyckoff, senior analyst at Kitco.com in a daily note.  

August gold
GC00,
+0.22%

GCQ21,
+0.22%

traded $5.20, or 0.3%, higher to settle at $1,776.80 an ounce, after rising 0.5% a day ago. The move on Thursday comes after bullion booked a June loss of more than 7%, a roughly 5% gain in the second quarter and a 6.6% decline in the first half of the year, based on the most-active contract.

The dollar, as gauged by the ICE U.S. Dollar Index
DXY,
+0.17%
,
a measure of the buck against a half-dozen currencies, was up 0.1% though it rose to a three-month high overnight. A stronger dollar can make dollar-pegged precious metals more expensive to overseas buyers.

Moves in gold however, were seen as likely to be constrained by risk sentiment percolating in global stocks, with the S&P 500 index
SPX,
+0.48%

headed for its 34th record close of the year.

Gold’s drop-off in June has been attributed to talk of dialing back monetary accommodations by the Federal Reserve, with an eye toward eventually raising interest rates, which would weigh on nonyielding gold prices, wrote Fawad Razaqzada, market analyst at ThinkMarkets, in a research report dated Thursday.

The analyst said he was bullish on bullion due to trend data that shows demand tending to pick up in the third quarter. Razaqzada said that only a rapid spike in yields for government debt, with the 10-year Treasury note
TMUBMUSD10Y,
1.468%

hovering under 1.50%, and a sooner-than-expected end to Fed’s easy-money policies could derail his upbeat thesis.

He said that “the fact that all other major assets classes are holding onto much of their stimulus-driven gains, gold looks massively undervalued in that regard.” 

In other metals, October platinum
PLV21,
+0.99%

picked up $8, or 0.7%, to settle at $1,080 an ounce, after shedding rising 0.2% on Wednesday.

September palladium
PAU21,
-0.49%

 gave up $10.80, or 0.4%, to close at $2,768.90 an ounce, after a 3.7% rise a day ago.

The most-active September copper
HGU21,
-1.17%

contract shed 5.3 cents, or 1.2%, to close at $4.236 a pound, after a 0.6% gain on Wednesday.

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