Gold claws up from lowest levels in a year as dollar index slips


Gold prices on Monday attempted to climb from the lowest levels in nearly a year as the dollar index slipped into the red.

The dollar remained lower even as a duo of upbeat economic reports did little to unseat expectations for higher U.S. interest rates over coming months, an outlook that has driven the greenback higher this year and helped to sink gold.

Read: U.S. retail sales climb again in June after jumbo gain in May

And: Empire State manufacturing index edges down in July from eight-month high

Much of the broader financial market’s attention—including that of investors who look to gold as a haven asset during geopolitical uncertainty—fixed on the meeting between U.S. President Donald Trump and Russian President Vladimir Putin in Finland on Monday. The two leaders could discuss arms control, alleged Russian meddling in the U.S. 2016 election and Ukraine. Analysts said the summit will be eyed for any hints that the U.S. sanctions against Russia will be lifted, while Trump said in an interview ahead of the summit that he’s going in “with low expectations.”

August gold

GCQ8, -0.09%

which started the global trading day in the red, was more recently up 20 cents, or less than 0.1%, at $1,241.50 an ounce. It settled Friday at $1,241.20, marking the lowest settlement for a most-active contract since July 17, 2017, according to FactSet data. The contract logged a 1.2% weekly decline last week, the fourth loss in five weeks.

A popular fund tracking gold, the SPDR Gold Shares

GLD, -0.17%

had steadied early Monday after it dropped 1.1% last week.

The ICE U.S. Dollar Index

DXY, -0.23%

a measure of the buck against a half-dozen monetary units, eased 0.2%. The index is up 2.7% so far in 2018.

A stronger dollar—which has drawn haven demand amid the clash over trade between the U.S. and China and has been pushed higher on rising-rate expectations—remains the most significant headwind for gold. A strengthening greenback can make commodities linked to the monetary unit, such as gold, more expensive to buyers using other currencies.

As gold’s reaction to other recent global news events—such as risks tied to a potential global trade war—have revealed, the metal has recently largely unlinked from its traditional go-to haven role and that leaves many analysts struggling to nail down the metal’s next move.

“Speculative market participants have been betting for the most part on falling gold prices—they have not significantly expanded their net short positions in the past two weeks, however. Gold continues to be sold by ETF investors: last week saw outflows of 9 tons, and 22 tons since the start of the month,” said Carsten Fritsch and the commodities team at Commerzbank, in a note. “Yet these quantities are really too small to have any noticeable effect on the gold price. While gold demand in India has been subdued so far this year, it has at least picked up again somewhat in China and Hong Kong recently.”

Fritsch said midweek congressional testimony by Federal Reserve Chairman Jerome Powell could prove to be the metal market’s highlight of the week but even then expectations for gradually rising interest rates have already been factored into dollar trading, and accordingly, into gold’s price.

“The testimony of Fed Chair Powell before the U.S. Senate and House of Representatives is unlikely to lend any new impetus to the gold price. The buoyant U.S. economy means the Fed is unlikely to deviate from its chosen path,” said Fritsch.

Meanwhile, industrial metals traded narrowly mixed. September silver

SIU8, -0.13%

defied gold’s early move, tacking on 4 cents, or 0.3%, at $15.86 an ounce. Its close at $15.815 Friday was the lowest finish year to date for a most-active contract. Gold’s sister metal saw a weekly decline of 1.6%, with the metal dogged by a downturn in industrials metals on the back of tariff tensions and a retreat for precious metals.

September copper

HGU8, -0.16%

 eased about 0.5% to $2.761 a pound after it logged a weekly loss of about 1.7%. October platinum

PLV8, -0.77%

 was up 0.6% to $835.40 an ounce, ending 2.2% lower last week, while September palladium

PAU8, -1.98%

 changed hands at $934.70 an ounce, up 0.2% on the day. The contract shed 1.6% for last week.

Source : MTV