Gold futures settled Tuesday at their lowest in about a week, feeling pressure from a stronger U.S. dollar in response to downbeat economic data out of China and Europe along with rising bond yields after an oil output cut by Saudi Arabia and Russia raised the specter of inflation again .
Price action
-
Gold for December delivery
GC00,
-0.05% GCZ23,
-0.05%
fell $14.50, or 0.7%, to settle at $1,952.60 an ounce on Comex. That was the lowest most-active contract settlement since Aug. 28, according to Dow Jones Market Data. -
December silver
SIZ23,
+0.09%
dropped 69 cents, or 2.8%, to end at $23.87 an ounce. -
December copper
HGZ23,
-0.19%
settled at $3.85, down nearly 0.1%. -
Platinum for October delivery
PLV23,
+0.11%
shed 3.6% to $933.50 an ounce, while December palladium
PAZ23,
+0.54%
declined by 1.1% to $1,214 an ounce.
Market drivers
Gold and silver both rose around 1.4% last week as a fall in Treasury yields reduced the opportunity cost of holding nonyielding assets. U.S. markets were closed Monday for the Labor Day holiday.
A rising dollar, however, was blamed for pressuring the commodities in Tuesday dealings , making them more expensive to users of other currencies.
“Gold seems to be searching for a fresh fundamental catalyst to trigger its next significant move,” Lukman Otunuga, manager for market analysis at FXTM, said in emailed commentary.
In the meantime, gold is “showing signs of exhaustion on the daily charts with weakness below the 50-day [simple moving average] opening a path back toward $1,920,” he said. “Should the $1,935 level prove to be reliable support, prices could retest the 100-day SMA around $1,953.”
The dollar was firmer Tuesday after a round of gloomy economic data. A Caixin survey showed China’s services sector expanded in August at its slowest pace in eight months, underlining worries that the country’s postpandemic recovery was faltering.
Meanwhile, a eurozone survey showed output in the bloc contracted at its fastest pace in nearly three years.
Against that backdrop, the ICE U.S. Dollar Index DXY, a measure of the currency against a basket of six major rivals, was up 0.5% at 104.755, near a five-month high.
Gold has “struggled to find fresh buying momentum after peaking above its bearish trend line that has been in place ever since hitting a new all-time high in May,” said Fawad Razaqzada, market analyst at City Index and FOREX.com.
“The bears needed to see some downside follow-through and this is what we might be getting today with gold now back below the bearish trend line,” he said. “Thus, a move lower looks increasingly likely, with the bears eying $1,900 as a possible first target.”
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