Metals Stocks: Gold set to slip a second session in a row, held in check by surging dollar
Gold futures early Tuesday looked set to trade lower in back-to-back sessions as a richer dollar traded at levels last seen in December.
Financial markets awaited the expected 2 p.m. Eastern Time announcement from President Donald Trump on the fate of the Iran nuclear deal and its implications for crude-oil and stock-market trading, which could influence the next move for haven precious metals.
June gold GCM8, -0.24% fell $ 3.80, or about 0.2%, to $ 1,310.30 an ounce. It declined modestly on Monday as well, after prices last week touched a roughly two-month low.
“Gold is still being kept in check by the firm U.S. dollar, which has profited from the widening of interest-rate differences between the U.S. and Europe,” said Carsten Fritsch, commodities analyst at Commerzank. “The interest advantage of U.S. Treasurys TMUBMUSD10Y, +0.22% over German government bonds FGBLM8, -0.14% is at its highest level in 29 years.”
The ICE U.S. Dollar Index DXY, +0.35% which measures the buck against six rivals, rose to 93.005 from 92.762 late Monday in New York, extending its recent advance to levels last seen in December. A steeper buck tends to turn off investors using other currencies to dollar-priced gold.
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Traders are watching for Trump’s decision on Iran because abandoning the Obama-era deal would presumably trigger a reimposition of economic sanctions on the Middle Eastern country. That could cut into global supplies for oil, providing support for crude prices CLM8, -0.99% which on Monday hit a 3 ½-year high before pulling back Tuesday. The stock market has so far had a mixed reaction to impending Iran sanctions.
Notably, “gold priced in euros trades at a four-month high with the Iran sanctions threat and China trade woes providing the metal with a defense against the stronger dollar,” said Ole Hansen, commodities analyst with Saxo Bank.
As for economic developments, Richmond Fed President Thomas Barkin, in his first public speech since getting that job, said Monday that he wants interest rates to go higher since the economy is growing strong with low unemployment. Higher rates tend to be bullish for the dollar and negative for dollar-priced gold.
Fed Chairman Jerome Powell said early Tuesday that emerging-market economies should be able to manage as advanced economies move toward tighter monetary policy. That view also helped support the dollar’s advance.
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At 10 a.m. Eastern, investors are due to get a March reading on job openings.
In other metals trading, July silver SIN8, +0.06% fell nearly 0.2% to $ 16.465 an ounce, while July copper HGN8, -1.36% traded at $ 3.039 a pound, down 1.3%. July platinum PLN8, +0.04% fell 0.3% to $ 910.40 an ounce and June palladium PAM8, +0.44% fell 0.2% to $ 960.00 an ounce.
In ETF action, the SPDR Gold Shares GLD, +0.02% eased 0.3% and the iShares Silver Trust SLV, -0.13% fell about 0.3%, while the VanEck Vectors Gold Miners GDX, +0.00% was down 0.4%.