Gold price settles lower, snaps 5-day win streak
San Francisco (Aug 13) Gold futures finished lower Thursday, quashing a five-day rally as the metal sank behind a U.S. dollar that ticked higher on upbeat U.S. economic data.
Gold’s earlier moves had been powered in large part by turmoil in China, a weaker dollar and hope that the Federal Reserve wouldn't raise key interest rates in September.
But those concerns weakened Thursday as U.S. economic data looked strong enough to put a September rate increase in play, and China moved to quell fears that its currency-devaluation efforts, begun on Tuesday, would spark turmoil in other economies.
December gold GCZ5, -0.09% settled down $8, or 0.7%, at $1,115.60 an ounce. September silver SIU5, -0.06% lost 8 cents, or 0.5%, to $15.40 an ounce.
“Gold and silver are pulling back from the recent break higher as safe-haven flows reverse,” said Jasper Lawler, market analyst, at CMC Markets in a Thursday research note.
This week’s weakness in the Chinese yuan has raised concerns about the global economy, weighing on stocks and other riskier asset classes while boosting gold, often seen as a haven.
“What is more, the SPDR Gold Trust GLD, -0.83% the world’s largest gold ETF, recorded inflows of 4.2 tons yesterday, the highest daily inflow since the end of June,” said Commerzbank commodity analysts in a note early Thursday.
But on Thursday, Chinese central bank officials—in a rare news conference—defended their handling of the currency’s drop. Markets across most of Asia ADOW, +0.13% have staged a relief rally Thursday, and U.S. stock futures and European equities were trading higher.
Gold futures briefly rallied above $1,126 an ounce early Thursday to a 3½-week high, before giving up that gain and turning lower.
U.S. economic data that offered more support to the idea of a September rate increase also weighed on gold.
The Commerce Department said on Thursday that retail sales rose 0.6% in July, just below the consensus forecast for a 0.7% rise, while sales for May and June were revised higher, while weekly jobless-claims also offered upbeat signs.
The dollar DXY, +0.09% gained Thursday on the reports, hurting gold as a stronger buck makes dollar-denominated commodities pricier for holders of other currencies.
Another factor that may be pressuring gold is a Thursday report from the World Gold Council, which said demand for the yellow metal plummeted 12% to a six-year low in the second quarter.
“The up-move up should still be intact if gold can hold $1,110 [an ounce] and silver can stay above $15.10,” Lawler said.
In other metals, October platinum PLV5, -0.21% lost $4.90, or 0.5%, to settled at $995 an ounce. September palladium PAU5, -0.32% shed $7.40, or 1.2%, to finish at $615.70 an ounce.
Meanwhile, high-grade copper HGU5, -0.06% for September delivery ended roughly marginally lower at $2.353 a pound.