(Kitco News) – Gold futures are near steady early Friday but remain near six-month highs as investors look to the metal as a safe harbor after recent turbulence in equities.
A little after 8 a.m. EST, Comex February gold was 80 cents softer at $1,280.30 an ounce but nevertheless had backed down only a few dollars from an earlier peak of $1,284.70 that was the contract’s most muscular level since June. March silver was up 7 cents to $15.38 and hit a four-month high of $15.435.
After a week of wild swings, the futures contract for the Dow Jones Industrial Average was pointing to a higher open for Wall Street. The stock market rebounded from an early sell-off to post its second straight gain Thursday, but otherwise equities took a drubbing during December.
“We saw fear in the marketplace [in recent days] go up,” said Phil Flynn, senior market analyst with at Price Futures Group. “Gold seems to be finding its way as a safe haven.”
Because the equity market has risen two days in a row, some of the risk aversion in financial markets has eased slightly, he continued.
“But the volatility we have been seeing in the stock market is going to continue to favor gold,” Flynn said, adding that some investors might be starting to look to the precious metal as a safe haven instead of the bond market.
Earlier in 2018, gold was often on the defensive due to rising U.S. interest rates, which in turn supported the U.S. dollar, which in turn tends to hurt gold and other precious metals. However, some of this has reversed course. While the Federal Reserve hiked interest rates again in December, comments from Fed Chair Jerome Powell in recent weeks seemed to signal policymakers may be thinking about slowing the pace of tightening.
Around 8 a.m. EST, the March dollar index was 0.131 point lower to 95.870 and had backed down 1.4% from the mid-December 97.195 high.
The February gold contract is headed for its third straight weekly rise.
“It is shaping up to be an incredibly positive trading week for gold prices thanks to heightened geopolitical risks and dollar weakness,” said Lukman Otunuga, research analyst at FXTM.
“Explosively volatile equity markets, global growth fears, Brexit uncertainty and political instability in Washington have accelerated the flight to safety – ultimately sending gold prices to levels not seen in more than six months….The yellow metal has the potential to become a major talking point across markets next year, especially when considering how the dollar is seen weakening on growth concerns and Fed expected to take a pause on rate hikes in 2019.”
By Allen Sykora
For Kitco News
Contact asykora@kitco.com
