Gold futures traded higher Tuesday, clawing back from a steady decline that had pushed the commodity to its lowest finish since Dec. 21, as a brawny dollar paused its advance.
Industrial metals, meanwhile, remained in focus, amid trade friction and questions about China’s economic expansion. Prices posted a Tuesday rebound after platinum futures marked their lowest settlement since late 2008 and copper prices finished at their lowest since September to start the week.
August gold
GCQ8, +0.80%
was up $6.40, or 0.5%, at $1,247.60 an ounce. The contract shed 1% to settle at $1,241.70 Monday. With the sputtering start this week, August gold futures are down 5.7% so far in 2018.
Read: Here’s how the commodities sector performed in the first half of the year
The most popular exchange-traded fund that tracks gold, the SPDR Gold Trust
GLD, -1.00%
rose 0.6% in early action. It dropped 3.5% in June, greatly expanding what is now a 5% year-to-date retreat.
The ICE U.S. Dollar Index
DXY, -0.21%
was down 0.2% at 94.65, knocked lower by a recovering euro as Germany averted a political crisis. The index is still up nearly 3% so far this year.
Read: Here’s what may be eroding gold’s traditional haven status
Interest-rate expectations, and with them, a higher dollar, have almost exclusively accounted for gold’s retreat. Higher rates dull the appeal of nonyielding bullion, while a firmer dollar makes the gold priced in the U.S. unit less appealing to investors using another currency.
Read: Why gold’s losing streak may get even worse, according to Mark Hulbert
Dollar-pegged gold has also decidedly turned lower even as uncertainty over global growth and anxieties about escalating trade tensions—factors that would typically provide a lift for the commodity—have intensified, weighing on prices for industrial metals.
Read: Gold-platinum ratio suggests stock bull market has room to run
Longer-term headwinds could remain in place for the metals complex. Andrew Lane, director of basic materials equity research at Morningstar, points to two primary metals markets factors in a mostly downbeat note on an “overvalued” basic materials stock sector.
“Miners and industrial metals companies we cover remain substantially overvalued, reflecting our expectation of a structural change in demand growth from China as its economy matures and makes the transition toward less commodity-intensive and more consumption-driven growth,” Lane said.
Also, “gold is among the few mined commodities that isn’t directly tied to the fortunes of Chinese fixed-asset investment, but as the U.S. Federal Reserve continues to pursue rate increases, prices look primed to fall,” he added. “Higher inflation has buoyed gold prices but should only strengthen the central bank’s resolve.”
As for the trade conflict’s more immediate twists, President Trump on Sunday said he sees his threat to impose global auto tariffs as his biggest weapon to extract concessions from trading partners.
Against that backdrop, platinum, used in catalytic converters, took the biggest hit among major Comex metals before a Tuesday rebound sent October platinum
PLV8, +3.27%
up $18.80, or 2.3%, at $832.20. The contract dropped more than 5% Monday to finish at $813.40 an ounce. FactSet data show that as the lowest most-active contract settlement since December 2008.
September copper
HGU8, -0.07%
was up about 0.2% at $2.9505 a pound. It settled at $2.944 a pound Monday, the lowest for a most-active contract since late September 2017, FactSet data show.
Prices of the metal used widely in construction applications have tumbled roughly 10% just since June 7 as China’s trade relations and any economic fallout are watched. China accounts for nearly half of global copper consumption, estimated this year at around 24 million metric tons.
Amid an escalating trade dispute with the U.S., growth in China’s manufacturing sector cooled slightly in June, a private survey showed earlier this week.
“Somewhat softer economic growth in China—as evidenced by the slight fall in the unofficial PMI—can explain some of the weakness in industrial metals prices,” analysts at Capital Economics said in a note.
Around the rest of the metals complex, September silver
SIU8, +1.29%
rebounded Tuesday, with a 15-cent gain, up nearly 1%, to $15.99 an ounce. It settled Monday at $15.835, marking the lowest finish since mid-December. The most popular exchange-traded fund that tracks silver, the iShares Silver Trust
SLV, -1.58%
rose 0.7%.
September palladium
PAU8, +1.34%
was up 0.8% to $941.90 an ounce.
Source : MTV
