Gold futures declined on Tuesday, feeling pressure from a stronger U.S. dollar and rising bond yields in response to downbeat economic data out of China and Europe.
Price action
-
Gold for December delivery
GC00,
-0.75% GCZ23,
-0.75%
fell $11.70, or 0.6%, to $1,955.40 an ounce on Comex. -
December silver
SIZ23,
-2.82%
dropped 49.7 cents, or 2%, to $24.065 an ounce. -
December copper
HGZ23,
-0.21%
traded at $3.8375, down 0.4%. -
Platinum for October delivery
PLV23,
-3.53%
shed 2.6% to $943.50 an ounce, while December palladium
PAZ23,
-0.60%
declined by 1.3% to $1,211 an ounce.
Market drivers
U.S. markets were closed Monday for the Labor Day holiday. Gold and silver both rose around 1.4% last week as a fall in Treasury yields reduced the opportunity cost of holding nonyielding assets. 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.
The ICE U.S. Dollar Index DXY, a measure of the currency against a basket of six major rivals, was up 0.4% at 104.638, 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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