Metals Stocks: Gold, silver manage slim gains ahead of Fed speakers, trade developments

Gold and silver traded higher in subdued action Tuesday as the leading dollar index, which typically moves inversely to precious metals, scratched out a small advance ahead of key Federal Reserve speeches.

Haven gold was underpinned, however, as U.S. stock indexes headed for a pullback, as remarks from President Donald Trump stoked fresh anxieties about the prospects of a near-term resolution of trade tensions between the U.S. and China.

Gold for December delivery

GCZ8, -0.14%

 was up $1.20, or 0.1%, at $1,223.70 an ounce. Gold for February delivery

GCG9, -0.11%

 gained $1.60, or 0.1%, to reach $1,230.30 an ounce.

December silver

SIZ8, -0.04%

 rose 3 cents, or 0.3%, to $14.24 an ounce. The March contract

SIH9, -0.02%

 added 4 cents, or 0.3%, at $14.385 an ounce.

The SPDR Gold Shares

GLD, -0.13%

 and iShares Silver Trust

SLV, -0.15%

ETFs were each up by about 0.1%. The VanEck Vectors Gold Miners ETF

GDX, -1.04%

advanced 0.3%.

The ICE U.S. Dollar Index

DXY, +0.23%

advanced 0.1% to 97.13. A firmer dollar typically dulls demand for U.S.-priced commodities, including gold, but that relationship wasn’t in force in early Tuesday dealings.

Market participants were largely marking time ahead of policy maker speeches as attention remains on the coming course for benchmark interest rates. A dollar-supportive and gold-negative rate increase is widely expected next month, but the expectation for the pace of rate moves next year has shifted of late. Fed Vice Chairman Richard Clarida speaks later Tuesday at 8:30 a.m. Eastern Time, while Chairman Jerome Powell speaks on Wednesday.

Clarida recently offered a relatively dovish monetary-policy outlook, saying that he sees “signs of slowing growth” and that sluggish expansion in the globe will be factored in the central bank’s calculus as it attempts to normalize interest-rate policy.

Read: Fed’s Powell speech will return spotlight on bond market’s recession indicator

“Both men conducted interviews two weeks ago that caused some shock in the markets [hurting the dollar and yields and supporting gold],” said Marshall Gittler, chief strategist at ACLS Global. “Rate expectations had been heading down ever since the Fed statement following the November [Federal Open Market Committee] meeting. That decline accelerated after Powell and Clarida were interviewed on TV.”

Next, attention turns to a late-week meeting between Trump and China’s Xi.

“If a trade deal were to be reached, our assumption is that import duties will be lowered again, which should push down import costs and therefore be disinflationary,” said Fawad Razaqzada, market analyst at Forex.com. “That in turn should further reduce the urgency from the Fed to hike rates, and lead to a rally in bond prices and a drop in yields and the dollar. As a result, gold should react positively, especially if stock markets and the economy continue to remain under pressure.”

Meanwhile, traders watched developments in Europe. The European Union has given approval of Britain’s divorce from the trading bloc. If the deal is given a green light by Parliament, the U.K. will then be able to focus on negotiations for the new trade and security relations with the EU after its official exit in March. U.K. Prime Minister Theresa May, however, is seen facing an uphill battle in winning parliamentary approval.

Read: What the G-20 summit means for currencies

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Rachel Koning Beals is a MarketWatch news editor in Chicago.

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