Gold settled higher Thursday, with a steady dollar and a drop in the U.S. stock market giving prices enough support to recoup some of the losses suffered over the last four sessions.
April gold GCJ8, +0.52% rose $4.40, or 0.3%, to settle at $1,319 an ounce, after scoring its lowest finish for a most-active contract since Jan. 9 on Wednesday, according to FactSet data. It had posted losses in each of the last four sessions-the longest such stretch of losses since December. Gold futures for the week were still set for a decline of more than 1%.
March silver SIH8, +1.43% also added 10.3 cents, or 0.6%, to $16.341 an ounce. The exchange-traded SPDR Gold Shares GLD, -0.17% added 0.1%, while the silver-focused iShares Silver Trust SLV, -0.45% was up 0.4%.
"There has been some flight to quality buying [in gold], but not enough to get over the hump and regain the $1,325 level where I thought support would hold," said Jeff Wright, chief investment officer at Wolfpack Capital. "I do not believe market is paying much attention to economic data out this week, but is rather in panic mode."
Data Thursday showed weekly U.S. jobless claims holding near a 45-year low.
U.S. stocks, meanwhile, were sharply lower Thursday in volatile trading, which has recently prompted seen wild swings in the Dow Jones Industrial Average DJIA, +1.38% and the S&P 500 index SPX, +1.49% The Dow was down 1.7% as gold futures settled. Gold often draws bids from investors fretting about a volatile equity market.
Recent losses for gold have been blamed on rising bond yields, which detract from gold, and a strengthening dollar, which makes the asset more expensive to buyers using weaker currencies.
The ICE Dollar Index DXY, -0.18% a measure of the buck against a basket of a half-dozen currencies, was down less than 0.1% at 90.18, but on track to post a weekly rise of 1.1%.
The dollar's strength is putting pressure on gold, but "most traders will be shocked when the U.S. dollar and the price of gold start to rise together," Ken Ford, president of Warwick Valley Financial Advisors, told MarketWatch. "That could happen if we get a credit/liquidity crisis in foreign bond & currency markets."
"The fundamental back drop for rising gold prices could not be better," he said. "Deficits and debt are about to explode, wage inflation pressures are building and the [Federal Reserve] is going to be gun shy about raising rates if the stock market volatility continues."
Still, benchmark yields have been climbing to their highest level in around four years, with the 10-year benchmark yield TMUBMUSD10Y, +0.00% hitting a high of 2.88% Thursday, with Treasurys under pressure after the Bank of England signaled the possibility of "earlier" rate hikes. Higher government bond yields can compete for demand from investors against gold which doesn't bear a yield and is viewed as a haven asset.
Fear of a surprise in inflation, which can eat away at a bond's fixed value, have helped to drive yields higher. Rising inflation would typically be a boon for gold, since it is often considered a hedge against rising prices, however, uncertainty about how quickly yields will rise and the degree to which inflation will resurface may be giving precious metals investors pause.
Among other metals, March copper HGH8, +1.10% ended at $3.082 a pound, down 0.2%. April platinum PLJ8, +1.21% shed 0.3% to $978.40 an ounce.
March palladium PAH8, +1.33% fell 2.3% to $962.20 an ounce, for the lowest finish since October.