Gold Rallies into New Year as Bulls Eye $1,300

Gold’s bullish breakout intensified on Wednesday, as jittery investors welcomed the new year by unloading stocks after the opening bell.

Precious Metals Rise

Gold for February delivery rose $5.80, or 0.4%, to $1,287.00 a troy ounce on the Comex division of the New York Mercantile Exchange. That’s the highest since mid-June. The yellow metal peaked at $1,291.00 earlier in the session.

Silver prices staged a large rally early in the day, with the February futures contract reaching a high of $15.68 a troy ounce in New York. The grey metal was last seen at $15.56 a troy ounce, having gained 3 cents, or 0.2%.

Gains in precious metals were limited by a resurgent U.S. dollar, which has managed to bounce back from a four-day skid. The dollar index climbed 0.8% to 96.80. Trading in the greenback has been highly volatile over the past month amid speculation that the Federal Reserve may be forced to scale back its tightening schedule on account of market volatility and a broad pullback in the real estate sector.

Risk-Off Sentiment on the Rise

Bullion has gained more than 7% over a two-month stretch that has been characterized by heightened risk-off sentiment. Traders are piling into safe havens amid a quarterly plunge in stocks and increased volatility in the currency markets.

Read: U.S. Stocks End Turbulent Fourth Quarter on a High; Trade Hopes Boost Investor Confidence

December marked Wall Street’s worst month since the financial crisis, with the S&P 500 and Nasdaq Composite briefly entering into correction. Stocks opened sharply lower on Wednesday, the first session back after the New Year, but have since pared most of their losses.

Much of the volatility on Wednesday was tied to growing evidence of a slowing Chinese economy. The Caixin China manufacturing index (PMI) fell below 50.0 in December, signaling contraction in the nation’s factory sector. The official manufacturing index from the National Bureau of Statistics earlier this week signaled contraction for the first time since 2016.

Traders, analysts and commentators are struggling to determine where stock prices are heading, setting the stage for a highly volatile quarter. In terms of fundamental developments, the outcome of U.S.-China trade negotiations in the coming months could loom large for investors. The Federal Reserve’s guidance on monetary policy will also be used to determine the market’s future trajectory.

The Federal Open Market Committee (FOMC) will hold its first meeting of the year on Jan. 29-30. The first interest rate verdict is scheduled for March.

Featured image courtesy of Shutterstock.

Chief Editor to and Contributor to, Sam Bourgi has spent the past nine years focused on economics, markets and cryptocurrencies. His work has been featured in and cited by some of the world's leading newscasts, including Barron's, CBOE and Forbes. Avid crypto watchers and those with a libertarian persuasion can follow him on twitter at @hsbourgi