Gold futures edged higher Wednesday, finding support as U.S. and European bond yields continued to slide, underlining fears of recession while the U.S.- China trade war remains unresolved and a no-deal Brexit looms for Europe.
Gold for December delivery GCZ19, -0.04% on Comex rose 40 cents, or less than 0.1%, to$1,552.20 an ounce, erasing a small decline as the yield on the 10-year Treasury note TMUBMUSD10Y, -1.49% fell a further 2.5 basis points to 1.459% after ending at its lowest since 2016 on Tuesday and moving within striking distance of its all-time low near 1.36%. Gold on Tuesday scored the latest in a string of more-than-six-year high settlements.
September silver SIU19, +0.70% was up 18.7 cents, or 1%, to $18.34 an ounce.
European government bond yields were also under pressure, with the 10-year Italian yield dipping below 1% for the first time on hopes a new governing coalition can be formed with fresh elections.
Falling yields reduce the opportunity of holding gold, which doesn’t offer a dividend.
“The fact is that in the absence of a trade deal, the economic data will continue to deteriorate, global growth will slow, manufacturing data will continue to become worse and central banks will have no option but to support the markets with whatever they have,” said Naeem Aslam, chief market analyst at TF Global Markets, in a note.
With the Federal Reserve under pressure to keep cutting U.S. interest rates, gold is likely to not only breach resistance at $1,600 an ounce but could push toward $1,800, Aslam said.
September copper HGU19, +0.04% was little changed at $2.547 a pound.