Gold price tries for third winning day as dollar slips

August 9, 2018

New York (Aug 9)  Gold prices ticked higher Thursday, trying for a third gain in a row, ahead of a slew of U.S. economic data that’s expected to back the case for moderately higher U.S. interest rates — a course of action at the Federal Reserve that’s been long priced into the gold market.

A slightly weaker dollar boosted gold’s upside Thursday but interest in riskier alternatives, as reflected in the stock market’s persistence around record highs, dulled some short-term attraction to the precious metal.

December gold GCZ8, +0.12%  added $1.60, or 0.1%, to $1,222.60 an ounce. Still, the commodity has mostly traded within a narrow band and is hovering around the lows of the year. It’s down about 0.9% for August so far and off 8.2% in the year to date.

September silver SIU8, +0.47% tacked on 6 cents, or 0.4%, to $15.50 an ounce. The white metal remains down nearly 11% so far for 2018, falling a sharp 4% in just the past month.

A popular metals exchange-traded fund, the SPDR Gold Trust GLD, +0.28% rose 0.1%. The comparable silver ETF, the iShares Silver Trust SLV, +0.49% added 0.4%.

U.S. dollar trading was muted, with the ICE U.S. Dollar Index DXY, +0.16%  up 0.1% at 95.22. Meanwhile, the benchmark 10-year Treasury note yield TMUBMUSD10Y, -0.31% stuck near 2.96%.

A stronger dollar can make purchasing dollar-pegged metals less attractive to buyers using other currencies, and richer yields for government paper, viewed as a risk-free instrument, can raise the opportunity costs of owning haven bullion, which doesn’t offer a yield and costs to store and insure.

Trade tensions, although doing little to buoy gold’s routine role as a haven asset, play out against an interest-rate backdrop that is negative in the short term for the gold market. The Federal Reserve is expected to increase interest rates twice more this year and three times next year. The next policy meeting is in September.

As for Thursday’s economic data:

•A report on weekly jobless claims is due at 8:30 a.m. Eastern Time for the period ended Aug. 4, with 217,000 claims expected

•Producer-price index for July is due also at 8:30 a.m. A gain of 0.2% is estimated.

•A report on wholesale inventories for June is scheduled for 10 a.m.

•Chicago Fed President Charles Evans is slated to speak about economic conditions and policy at 9:30 a.m. with the press in Chicago, with an embargoed release of that interview set for 1 p.m. Eastern.

Gold has traded under pressure as riskier financial markets in the U.S. have remained relatively resilient despite trade tensions between Washington and Beijing lingering in the background. On Wednesday, China warned that duties imposed by President Donald Trump’s administration on some $50 billion of Chinese imports set to be enacted on Aug. 23, would be matched.

Separately, the U.S. also unveiled a new series of sanctions on Moscow over a nerve-agent attack on a former Russian spy and his daughter in the U.K., which could elevate global anxieties and underpin gold demand.

In other metals trading, September copper HGU8, +2.04% rose 1.8% to $2.801 a pound. October platinum PLV8, +1.10%  rose 0.9% at $837.30 an ounce, while September palladium PAU8, +0.76% advanced 0.7% to $892.70 an ounce.


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