Gold rises, padding weekly advance as dollar index deepens September retreat

Gold futures tried for back-to-back gains Thursday, boosted again by weaker trading for a dollar index that has already shed nearly 2% over the past month.

December gold GCZ8, +0.19%  rose $2, or nearly 0.2%, to $1,210.30 an ounce as the dollar index DXY, -0.60%  dropped 0.7%. The dollar and gold, which is chiefly priced in the U.S. currency, tend to move inversely.

The precious metal contract, accumulating a 0.8% gain this week so far, was on track to log its eighth straight day above the $1,200 line that analysts have monitored as an indication that gold could strengthen its advance from here. Gold trades down more than 9% so far in 2018.

“Gold prices have inched higher as the ‘big’ dollar softened amid easing [China-U.S.] trade tensions. Nevertheless, expect investors to remain cautious ahead of next week’s Fed meeting,” said Dean Popplewell, vice president of market analysis at Oanda. “Fading market fears over a Sino-U.S. trade row has the dollar trading within striking distance of its two-month lows.”

Fed policymakers will meet for a two-day meeting ending Sept. 26. The market is pricing in over a 90% chance of a quarter-point rate hike then. The Fed has penciled in four moves in total this year. That means another hike is likely in December, a move that financial markets are largely expecting though traders have shown some flashes of wavering confidence of late, citing trade uncertainty and global economic hiccups.

As for Thursday’s economic data, a jump in Philly-area manufacturing and continuing upbeat news within jobless benefits claims figures supported the expected rate hike next week.

Higher interest rates boost the dollar, a prospect that has lifted the greenback more than 2% this year. In addition to the tug of a firmer dollar against gold, higher rates cut the allure of holding nonyielding bullion.

In other trading, December silver SIZ8, +0.04% rose 0.3% to $14.325 an ounce. Silver holds above the recent low of $14.142, set late last week, which marked the weakest settlement for a most-active contract since January 2016, according to FactSet data.

Among the exchange-traded funds, the popular SPDR Gold Trust GLD, +0.34%  rose 0.4%, while iShares Silver Trust SLV, +0.22%  added 0.7%. The VanEck Vectors Gold Miners ETF GDX, +1.33% rose 1.7%.

December copper HGZ8, -0.18%  slipped less than 0.1% to $2.728. October platinum PLV8, +0.89%  rose 1% to $829.80 an ounce and December palladium PAZ8, +1.18%   gained 0.9% to $1,040.30 an ounce, after hitting its highest mark since April in recent trading.

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