By Barani Krishnan
Investing.com - The fear factor across markets is giving gold a reprieve from the doldrums as the yellow metal joins the dollar as a safe haven to those fleeing risk on the back of U.S.-China trade war.
Bullion and futures of gold edged higher on Wednesday for their best one-day performance in nearly a week after the S&P 500 and Nasdaq hit two-month lows and the 10-Year Treasury yield fell to a 20-month low on fears of further fallout to the global economy from the trade war.
Spot gold, reflective of trades in bullion, traded at $1,282.44 per ounce by 2:40 PM ET (18:40 GMT), up $3.02. While the rise was just about 0.2% on the day, it was, nevertheless, gold's best showing in nearly a week, with the last comparative rise being 0.9% on May 3.
Gold futures for June delivery, traded on the Comex division of the New York Mercantile Exchange, settled up $3.90, or 0.3%, at $1,281 per ounce.
Wednesday was one of those rare days when both gold and the dollar moved higher together, as the greenback has lately been the preferred hedge to the trade war. The dollar index, which measures the greenback against a basket of six currencies, was up 0.2% at 98.035.
Investors have increasingly looked for safe havens in recent days. The CBOE Volatility Index, a gauge of the fear factor in markets, hit a two-week high on Wednesday amid reports that Beijing was preparing to limit the export of rare earth elements in its attempt to strike back at the U.S. The rare earth elements include a group of 17 chemical elements used in everything from high-tech consumer electronics to military equipment.
Notwithstanding Wednesday's gain, few saw gold having a continued rally that could propel it back above the key $1,300 mark.
"Gold has to crack the $1,289 resistance first if it wants to get to $1,300," said Eli Tesfaye, precious metals strategist at RJO Futures in Chicago. "I see more of a trading range of $1,275-$1,289 for now."
Holdings of the SPDR Gold Shares ETF (NYSE:GLD), the world’s largest gold-backed exchange-traded fund and a gauge of investor interest in the metal, fell 0.2% to 737.34 tonnes on Tuesday from Friday, demonstrating the weak appetite among longs in the game.
Elsewhere in metals, palladium rose again, helping the silvery-white auto-component metal retain its standing as the world's costliest-traded metal despite monthly losses since the first quarter.
Spot palladium jumped $7.35, or 0.6%, to $1,347.60 an ounce. It traded above $1,600 earlier this year before losing 10% in March and settling flat in April. While it is up 6% for the year, it is on track to finish down 3% in May.
Trades in other Comex metals as of 2:40 PM ET (18:40 GMT):
Palladium futures up $4.05, or 0.3%, at $1,340.75 per ounce.
Platinum futures down $4.70, or 0.6%, at $792.40 per ounce.
Silver futures up 11 cents, or 0.8%, at $14.43 per ounce.
Copper futures down 3 cents, or 1.3%, at $2.66 per pound.