Manila Social Club
Gold futures finished at their lowest level in more than two weeks on Monday, with prices posting their fourth loss in five sessions on the back of a stronger U.S. dollar.
The British pound took a hit from news that the U.K. aimed for a clear break from the European Union and data on U.S. manufacturing was somewhat upbeat, helping to support the greenback—weighing on prices for gold, which is traded in the dollar.
December gold GCZ6, -0.19% fell by $4.40, or 0.3%, to settle at $1,312.70 an ounce. That was the lowest settlement for futures prices since Sept. 16, according to FactSet data.
“The buck-denominated precious metals have been undermined by a small rebound in U.S. dollar thanks to a stronger-than-expected reading on the ISM manufacturing sector” for September, said Fawad Razaqzada, technical analyst at Forex.com.
The Institute for Supply Management said its U.S. manufacturing index rose to 51.5% last month after dipping into negative territory in August.
The ICE Dollar Index DXY, +0.42% a measure of the U.S. currency against a basket of other major currencies, climbed Monday, up 0.2% as of gold’s settlement.
The buck got an additional boost as U.K. Prime Minister Theresa May indicated she would pursue a clear break from the European Union by the end of March. That fueled a sharp drop in the British pound GBPUSD, -0.4828% versus the dollar.
Don’t Miss: How a gold miner turned a $1 million investment into $3 billion
A fairly busy U.S. economic lineup this week could trigger renewed metals market attention on interest-rate prospects. A flurry of Federal Reserve speakers in late September left financial markets largely confident in their expectation for the first U.S. rate hike in a year in December, but that move isn't in stone and could remain data-dependent.
Gold tends to decline in a rising-rate environment, losing demand to asset classes that offer a yield when precious metals don't. Higher interest rates can boost the dollar and dull demand for dollar-denominated commodities, including gold. That means gold and the dollar often, but not always, move inversely.
The U.S. government Monday reported that spending on construction in August tumbled by 0.7%. The much-anticipated monthly U.S. employment report due at the end of the week. See the economic calendar.
“I have received many emails from pundits arguing that the Fed is on a tightening bias, which will hurt the metals complex,” said Peter Hug, Kitco Metals global trading director, in a commentary. “I hope the Fed tightens. To be clear, I hope the Fed tightens because economic activity justifies it, not because the Fed wants to save face.”
Gold futures ended September 0.4% higher, but Friday’s weakness erased gold’s gain for the quarter; the yellow metal lost nearly 0.3% in the three-month stretch, according to FactSet data, which tracks the most-active contracts. Gold’s 24% year-to-date gain may need a fresh catalyst but has so far held up, analysts have noted.
Read: Commodities stumble, but still on track for first yearly gain since 2010
On a technical basis, traders need to trade “very carefully” between $1,296 and $1,313 “as gold has reversed many a times in the last quarter,’ said Chintan Karnani, chief market analyst at Insignia Consultants.
U.S. stocks, meanwhile, traded broadly lower Monday, following a late-Friday recovery that tracked a 14% rise for U.S.-traded shares of troubled Deutsche Bank AG DB, -0.84% DBK, +1.87% Deutsche Bank has roiled markets and sent investors into a “risk-off” mind-set that favors gold and other perceivably lower-risk investments.
But the German bank’s shares gained sharply Friday after a report said the bank may be able to negotiate a far lower settlement with the Justice Department over several mortgage-securities cases. By Monday, The Wall Street Journal was reporting slowly advancing talks at the financial giant, but no firm deal yet.
“We continue to see issues with the European banks, with Deutsche Bank just the tip of the iceberg. Japan will continue to ease monetary policy. Neither U.S. candidate will receive bipartisan support and U.S. fiscal policy is only possible with a serious increase in debt,” said Hug. “Why would I want to be sell core positions in gold?”
Read: Brisk hiring, rising wages keep economy trudging ahead with no recession in sight
Rounding out action in metals, silver for December delivery SIZ6, -0.23% lost 34.6 cents, or 1.8%, to $18.868 an ounce; silver gained roughly 3.2% last quarter. December copper HGZ6, -0.52% fell 1.9 cents, or 0.8%, to $2.192 a pound.
See: How ‘Dr. Copper’ is trying to break out—in one chart
January platinum PLF7, -0.11% shed $25.40, or 2.5%, to $1,009.10 an ounce, while October palladium PAV6, -1.35% fell $9.70, or 1.3%, to $711.80 an ounce.
Among the exchange-traded funds, the SPDR Gold Trust GLD, -0.25% fell 0.5%, the iShares Silver Trust SLV, -1.81% declined by 1.8%, and the VanEck Vectors Gold Miners ETF GDX, -1.78% lost 2.5%.
Voters reject Colombia's peace deal with FARC
Colombia's voters narrowly rejected a peace accord between President Juan Manuel Santos and Marxist rebel group FARC that would have ended 52 years of conflict.
