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Gold futures settled lower on Tuesday as a rise in the U.S. stock market dulled demand for the safe-haven metal, and concerns over rising global interest rates and signs of weakness in gold demand in China and India outweighed support for gold from a weaker U.S. dollar.
Price action
August gold
GCQ22,
-0.22%
GC00,
-0.22%
fell $1.80, or 0.1%, to settle at $1,838.80 per ounce after losing 0.5% on Friday and posting a weekly decline of 1.9%. U.S. markets were closed for the Juneteenth holiday on Monday. .
July silver
SIN22,
+0.64%
tacked on 18 cents, or 0.8%, $21.768 per ounce.
July copper
HGN22,
+0.46%
settled at $4.039 a pound, up 3 cents, or 0.6%.
July platinum futures
PLN22,
+0.99%
climbed $9.30, or 1%, to $939.50 per ounce.
September palladium
PAU22,
+3.30%
rose $64, or 3.6%, to $1,862.70 per ounce.
What analysts are saying
Gold has been “pushed around within the $1,800-$1,875ish range over the past couple of weeks amid all the central bank rate hikes, inflation worries and recession talk,” said Fawad Razaqzada, market analyst at City Index and FOREX.com, in a Tuesday note.
“There are clearly conflicting factors at play which has prevented the metal from making a decisive move in one or the other direction,” he said.
“Rising yields and a generally strong dollar are never positive influences for assets that pay no interest or dividends, yet the fact it hasn’t completely broken down means there are other factors supporting it,” said Razaqzada. “These include safe haven flows amid the turmoil in crypto markets and the sell-off in equities over the past few months, as well as demand from inflation hedging.”
Gold has held onto a gain so far this year. “Whether prices continue higher will surely result from the ongoing battle between rising rates and a dollar that just won’t stop going up,” Adam Koos, president of Libertas Wealth Management, told MarketWatch.
He pointed to some profit taking or “some adjustments and/or selling in portfolios as we get close to the end of the month” for Tuesday’s modest fall in gold prices.
The recent rise in the dollar “tells me that this is a different kind of inflation — one we haven’t seen before,” he said. “If we see rates continue to complete a bottoming process, all while inflation settles down with the re-opening and stabilization of factories in Asian countries as they move away from a “zero-COVID” policy, then we could see gold prices break down and head lower through year-end.”
Meanwhile, a team of analysts at Commerzbank said data point to relatively weak demand in China and India.
“As the Swiss Federal Customs Administration has reported today, Switzerland exported a good 105 tons of gold in May. Less than half of this total went to China and India. At 10 tons, gold exports to China were the lowest in 14 months. This may well be related to the coronavirus lockdowns that had severely restricted public life,” the team wrote in a note to clients.
Other markets
The ICE U.S. Dollar Index
DXY,
-0.31%
fell by 0.3% to 104.365, but remains higher for the month.
U.S. benchmark stock indexes traded higher, with the Dow Jones Industrial Average
DJIA,
+1.95%
up after its worst week since 2020.
The 10-year Treasury yield
TMUBMUSD10Y,
3.293%
was up 5.7 basis points at 3.29.
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