Gold Futures Rise From Nine-Month Low as Dollar Rally Relents

  • Relative strength 14-day indicator slides below key 30 level
  • Investors sold most gold from ETFs last week since June 2013

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Gold futures advanced from the lowest since February as the dollar declined, boosting demand for the metal as an alternative asset. Silver slipped, drawing closer to a bear market.

The Bloomberg Dollar Spot Index fell for the first time in four days. Bullion also climbed Monday after its 14-day relative-strength index held below 30, signaling to some traders and analysts that the metal was oversold. Investors fled exchange-traded funds backed by bullion last week by the most in more than three years, data compiled by Bloomberg show.

Gold is recovering after President-elect Donald Trump’s pledge to cut U.S. taxes and boost infrastructure spending helped send the dollar gauge to the highest since January. Trump’s promise to spend as much as $1 trillion to rebuild roads, bridges and airports is bolstering the outlook for growth and inflation, and fueling bets on an interest-rate increase at the Federal Reserve’s final meeting of the year next month.

There’s “bargain hunting into gold,” said James Cordier, the founder of Optionsellers.com in Tampa, Florida. “We’ve had one new high after the next in the dollar. It’s giving up some of those gains.”

Gold futures for December delivery climbed 0.1 percent to settle at $1,209.80 an ounce at 1:55 p.m. on the Comex in New York. On Friday, the metal fell to $1,201.30, the lowest since February. The metal’s 14-day relative-strength index for the past three days has been below 30, a signal to some traders and analysts that an asset is oversold.

Weakness in the dollar tends to help commodities priced in the currency.

The outlook for increased inflation next year may help boost demand for gold as a hedge against higher prices, according to Cordier.

Silver futures for March delivery fell 0.6 percent to $16.621 an ounce on Monday. The metal is nearing a 20 percent loss from a closing high set in early August, a threshold that marks the common definition of a bear market.

In other metals:

  • Palladium fell while platinum advanced on the New York Mercantile Exchange.
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