Gold futures tallied a third consecutive session decline on Wednesday, settling at their lowest in nearly a week as further strength in the U.S. dollar pressured prices for the precious metal.
Gold gave up early gains that had been driven by uncertainty surrounding a U.S. debt-ceiling deal in Congress.
Price action
-
Gold futures for June delivery
GC00,
+0.64% GCM23,
+0.64%
declined by $9.90, or 0.5%, to settle at $1,964.60 per ounce on Comex. -
July silver
SI00,
+1.11% SIN23,
+1.11%
declined by 38 cents, or 1.6%, to $23.24 per ounce. -
Palladium for June delivery
PAM23,
+1.65%
fell by $48.60, or 3.4%, to $1,398.10 per ounce, settling below $1,400 for the first time since March 21, FactSet data show. Platinum for July delivery
PLN23,
+0.74%
retreated by $28.10, or 2.7%, to $1,029.50 per ounce. -
Copper for July delivery
HGN23,
+1.37%
declined by 9 cents, or 2.5%, to $3.56 per pound.
Market drivers
“It has been an interesting session for gold as debt ceiling angst has yet to trigger safe-haven flows for the precious metal,” Edward Moya, senior market analyst at OANDA, told MarketWatch on Wednesday.
Gold is struggling as the dollar rallies and yields on short-dated Treasurys surge and after more hawkish Federal Reserve comments, he said. “It is starting to look like the Fed might have to do more tightening and that should keep pushing back all those rate cut bets.”
Gold futures showed little reaction in electronic trading Wednesday afternoon shortly after minutes from the Fed’s May meeting showed that several Fed officials said more rate hikes may not be needed.
“ “It is starting to look like the Fed might have to do more tightening and that should keep pushing back all those rate cut bets.” ”
In Wednesday dealings, the ICE U.S. Dollar index
DXY,
added nearly 0.4% to 103.88. It trades over 2% higher month to date, putting pressure on dollar-denominated prices of gold.
“If we are to see continued strength in the dollar and rates resume their move higher, it is hard to imagine gold holding above the uptrend,” analysts at Sevens Report Research wrote in Wednesday’s newsletter.
Also see: Goldman Sachs sees potential for strong commodity performance after largest ‘de-stocking’ ever witnessed
Gold prices posted gains in five of the last six months with the U.S. dollar posting losses for nearly all of those months.
However, gold has reversed some of these gains over the past two weeks, as investors favored the U.S. dollar as a potential safety play to protect them from any blowback unleashed by the debt-ceiling impasse in Washington.
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