Gold price swivels between losses and gains as metal pinned in by rising stocks, dollar
New York (June 20) Gold prices switched between narrow losses and gains Tuesday, unable to find much traction as the dollar strengthened and stock looked to set records, dulling the appeal of haven gold.
Precious metals have been saddled by a bearish tone in the wake of recent signals from the Federal Reserve for at least one more increase to interest rates this year. Higher rates make gold and other commodities, which don’t bear yields, less appealing.
“Another busy day on the Fedspeak front may continue to weigh on prices if policy-makers’ tone mirrors the confident posture on display in last week’s policy announcement,” said Ilya Spivak, currencies and metals analyst with FX Daily.
August gold GCQ7, -0.25% was up $1.30, or 0.1%, to $1,248 an ounce after the contract traded down some 0.2% earlier in the session. The metal suffered a 1.2% weekly decline last week, in fact back-to-back weekly drops after a string of winners.
The closely watched dollar index DXY, +0.33% rose 0.1%, providing a headwind for commodities priced in the currency. A stronger dollar tends to make assets pegged to the buck more expensive to buyers using other monetary units.
The S&P 500 index SPX, -0.31% and Dow Jones Industrial Average DJIA, -0.01% were on track to push further into record territory as technology shares continued to rebound from a recent selloff.
Economic and interest-rate policy uncertainty could continue to hold sway over metals and currency trading, although few major economic data releases are due at the week’s start. In addition to the raft of Fed speakers, a speech by House Speaker Paul Ryan on tax reform—the prospect of which has been a primary driver of stocks and other risk-on markets—was in focus as well.
Boston Fed head Eric Rosengren said Tuesday that persistently low rates could undermine financial stability.
Analysts have said the central bank’s more hawkish tone to forward-looking policy was somewhat surprising. Economic data have been spotty, but the Fed seems convinced that weakness is temporary.
Last week, Fed Chairwoman Janet Yellen laid out a plan to shrink the central bank’s massive $4.5 trillion balance sheet, one of its economy-spurring tools, starting this year, as the Fed also raised interest rates. On Monday, New York Fed President William Dudley, a voting member of the Fed’s policy-setting committee, said he viewed the U.S. economic outlook as “pretty good,” a comment that was read by investors as offering support to the Fed’s recent monetary-policy normalization initiative
Meanwhile, July silver SIN7, -0.59% rose less than half a cent, or 0.05%, to $16.51 an ounce. It had dropped over three straight sessions.
July copper HGN7, -1.43% fell 3 cents, or 1.3%, to $2.5555 a pound. July platinum PLN7, -0.80% dropped $2.90, or 0.3 %, to $924.40 an ounce, while September palladium PAU7, +0.83% rose 40 cents, or 0.1%, to $856 an ounce.
Among the exchange-traded funds, the SPDR Gold Trust GLD, -0.22% was up 0.2% premarket. The iShares Silver Trust SLV, -0.35% declined by 0.2%, while the VancEck Vectors Gold Miners ETF GDX, -0.52% rose 0.4%.
Source: MarketWatch
