Gold turns higher, tracks weaker dollar

Gold moved slightly higher Wednesday as a recovering euro dented the dollar index, a barometer that often moves inversely to dollar-denominated gold.

Gold was lower initially Wednesday then firmed even as investors dipped a toe back in global stock markets and bid up traditionally riskier currencies, taking a lukewarm attitude toward the haven metal as flaring worries about Italy’s instability for the European Union eased for now.

August gold added $1.40, or 0.1%, to $1,305.50 an ounce. The contract earlier grazed the closely watched $1,300 line intraday before the mild bounce. Prices based on the most-active contract have drifted near that line — underpinned slightly by the Italy scenario, China trade-talk uncertainty and North Korean diplomacy bumps — after hitting a fresh low for 2018 earlier in May.

“There are still geopolitical concerns at mid-week. The U.S. continues to ratchet up the pressure on China regarding trade issues and worries about Italy’s future in the European Union are causing anxiety among European investors,” said Jim Wyckoff, senior analyst at Kitco Metals.

Italy’s stocks and bonds, as well as the euro, were all in recovery mode, and U.S. stock futures were taking part in the advance. Italy’s two biggest antiestablishment parties — the 5 Star Movement and the League — were again in talks to form a euroskeptic coalition government after an earlier agreement was effectively unwound by Italy’s president this week, according to reports on Wednesday.

The euro rose to $1.1597 from $1.1541 late Tuesday in New York, helping to send the ICE U.S. Dollar Index off the 10-month high hit a day earlier.

The yield on the 10-year Treasury note was around 2.84%. On Tuesday, the U.S. benchmark rate tumbled 16 basis points to 2.77%, in its largest one-day drop since the Brexit vote in June 2016.

Gold prices showed limited reaction to the latest on the economic front. The U.S. added 178,000 private-sector jobs in May, payrolls processor ADP said. The report is often seen as a curtain-raiser to the more comprehensive Labor Department report due for release Friday. Meanwhile, U.S. GDP expanded at a slightly slower 2.2% rate in the first quarter, a revised release showed. And, the U.S. trade deficit fell slightly in April.

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The Federal Reserve’s Beige Book is due for release at 2 p.m. Eastern, but no Fed officials are slated to deliver speeches on Wednesday.

And next for gold? “Technically, June gold bears have the slight overall near-term technical advantage [with] prices still in a seven-week-old downtrend on the daily bar chart,” said Wyckoff, noting that the bearish position could be confirmed should the market retest the May low of $1,281.20.

In other trading, July silver gained 0.1% to $16.390 an ounce, while July copper  traded at $3.0485 a pound, down 0.5%. July platinum  fell 0.1% to $905.10 an ounce. September palladium rose 0.1% to $972.20 an ounce.

Among exchange-traded funds, the SPDR Gold Shares  fell 0.2%, as the iShares Silver Trust  slipped 0.1%. The VanEck Vectors Gold Miners ETF  was near even.