gold futures news

gold futures news

July 25th, 2018

Gold futures steadied near a one-year low Wednesday as a leading dollar index eased, while a percolating trade spat between the U.S. and Europe faced a key test in the afternoon meeting between the European Union’s top official and President Donald Trump.

Financial markets from stocks to bonds to precious metals and currencies were largely rangebound as the European Commission President Jean-Claude Juncker and Trump prepared to meet at the White House at 1:30 p.m. Eastern time to try to de-escalate the trade fight.

And see: Tariffs are ‘the greatest,’ Trump says ahead of EU chief’s visit

“The main topic of the talks will be the trade dispute between the two parties that began when U.S. import tariffs were introduced on steel and aluminum from the EU in early June. The EU had responded by slapping tariffs on U.S. products in its turn, and has meanwhile drawn up a list of products that could likewise be subjected to a punitive tariff if the U.S. were to impose further tariffs,” said Carsten Fritsch, commodities analyst at Commerzbank, in a note.

“If contrary to expectations any sort of agreement should be reached between Trump and Juncker, the gold price would probably fall because this would presumably increase the market’s risk appetite,” he said.

Check out: Here’s what may be eroding gold’s traditional haven status

Gold for August delivery on Comex GCQ8, +0.31% was up $6.30, or 0.5%, at $1,240.90 an ounce Wednesday after a choppy start to the week. Prices had settled at $1,224 at one point last week, the lowest for a most-active contract in about a year. September silver SIU8, +0.32% added 7 cents, or 0.5%, to $15.595 an ounce on Wednesday.

The ICE U.S. Dollar Index DXY, -0.04% a measure of the U.S. currency against a basket of six major rivals, edged down about 0.1% at 94.49.

A stronger dollar can make commodities priced in the currency more expensive compared to those using other monetary units. And both gold and silver have been in the doldrums in recent weeks and months as the dollar has gained traction. Silver is off 9.5% so far this year, while gold futures are down about 6.4% in 2018. Meanwhile, the dollar index has advanced roughly 2.7% in the first seven months of the year.

SPDR Gold Shares GLD, +0.31% the largest exchange-traded fund to invest directly in physical gold, was up 0.5% in premarket action Wednesday.

SPDR holdings have been trending down since the end of April but interest in the contracts remains strong, Bloomberg data shows. It’s a retreat pinned in part on higher U.S. interest rates, which highlight the trade-off of holding nonyielding gold that costs money to store and insure. The Federal Reserve raised interest rates in June for the seventh time since December 2015. Market expectations, in large part based on Fed signals, are for two more hikes this year.

Gold has been restrained by rising market rates. The 10-year Treasury note TMUBMUSD10Y, -0.35% this week grazed 2.963%, representing a six-week rate peak.

“Inflows into ETFs have begun to accelerate. This is the vehicle used primarily by fund managers, and either they believe gold is cheap at $1,225 or they are becoming increasingly concerned of a ‘tipping’ event on the near-term horizon,” said Peter Hug, global trading director at Kitco Metals. “Without making a political statement, one has to wonder about the chaos that swirls around the administration on a daily basis. Will this impact policy on trade, North Korea, Iran or the mid-terms. Does it make sense to add gold to your portfolio when one looks at the entire picture?”

Other Comex traded metals rose. September palladium PAU8, +1.36% advanced $15.50, or 1.7%, to $924.10 an ounce, while October platinum PLV8, +0.45% rose $8.10 an ounce, or about 0.9%, to $843.70 an ounce. September copper HGU8, +0.20% meanwhile, was little changed at $2.8085 a pound.

- MarketWatch.