Gold slips, but silver gains, to start week as dollar index eases
Gold prices eased Monday, languishing at their lowest levels in nearly a year, though industrial metals traded mixed as immediate worries over a deeper global trade war cooled.
Market 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 are expected to 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, +0.21% lost $3.70, or 0.3%, to $1,244.90 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 such loss in five weeks.
A popular fund tracking gold, the SPDR Gold Shares GLD, -0.44% had steadied early Monday after it dropped 1.1% last week.
But 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 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.
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.
The ICE U.S. Dollar Index DXY, -0.19% a measure of the buck against a half-dozen monetary units, eased 0.2% in early Monday trading, but the drop offered little traction to gold. The index is up 2.7% so far this year.
On the economic front Monday, retail sales data for June are due at 8:30 a.m. Eastern Time and are expected to show an increase of 0.5% last month, according to economists surveyed by MarketWatch.
The Empire Sate index for July is on the docket at 8:30 a.m. Eastern as well, followed by a report on business inventories in May at 10 a.m. Eastern.
Meanwhile, industrial metals traded narrowly mixed. September silver SIU8, +0.09% 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, -0.65% eased about 0.5% to $2.761 a pound after it logged a weekly loss of about 1.7%. October platinum PLV8, +0.10% was up 0.6% to $835.40 an ounce, ending 2.2% lower last week, while September palladium PAU8, -0.27% changed hands at $934.70 an ounce, up 0.2% on the day. The contract shed 1.6% for last week.
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