Gold prices settle at a two-week low

March 15, 2018

New York (Mar 15)  Gold prices fell Thursday to post a two-week low, as a stable dollar sapped some demand for the precious metal, but persistent trade tensions supplied a floor for the haven asset.

April gold GCJ8, -0.69% fell $7.80, or 0.6%, to settle at $1,317.80 an ounce, marking its lowest finish since March 1. Gold futures ended lower Wednesday after up-and-forth trading that has set prices up for a loss of roughly 0.5% for the week. It was a trading session for reflection on Wednesday, which marked one decade since gold prices first topped $1,000 an ounce.

The ICE U.S. Dollar Index DXY, +0.35%  was up 0.4% at 90.03 Thursday, though the index was down roughly 0.7% so far this month.

Tensions around a potential global trade war have worked to keep a floor under gold.

“It seems people are sitting on cash at the moment,” said Chintan Karnani, chief market analyst at Insignia Consultants. “There is too much chaotic news at the moment. U.K.-Russia spat, Japan’s land scandal, Trump administration policy uncertainty among other news is keeping traders and investors on the edge.”

Concerns were heightened after President Donald Trump said Wednesday his administration would seek to trim the U.S.’s trade deficit with China by $100 billion, a day after saying he wants to impose up to $60 billion in tariffs on Chinese goods. Wall Street jitters that a retaliation by Beijing, the world’s second-largest economy, and other countries, could derail the U.S.’s economic expansion now in its 10th year. What’s more, in response to the poison attack on a former Russian spy in England, the British government has imposed sanctions on Russia. On Thursday, the U.S. government also issued against Russia for meddling in the 2016 presidential elections and for cyberattacks.

Meanwhile, “incoming U.S. economic data suggest firm growth with steady inflation,” said Karnani. Gold and silver’s “inability to rise” against this backdrop has “resulted in further correction” for the two precious metals.

May silver SIK8, -0.89%  fell 0.7% to $16.422 an ounce.

Weekly jobless benefits claims eased while two regional manufacturing indexes offered solid readings for March. Home-builder confidence ticked down by one point to a reading of 70 in March. The Thursday data did little to knock back market expectations for a Federal Reserve interest-rate hike next week.

Data have been under careful watch as rising inflation could add pressure on the Fed to speed up its rate increases or add on to the three rate increases estimated for 2018, which could lift the dollar, though potentially hit the stock market hard. Gold, in turn, although negatively affected by higher interest rates, could attract hedging demand against worrisome inflation.

“Gold is likely to remain range-bound until we get closer to the FOMC meeting next week. As long as the 10-year U.S. bond yield TMUBMUSD10Y, +0.29% remains south of 2.9%, we would expect gold to remain bid, and unless we get a surprise news bite, the upside remains limited until the market can digest the Fed’s path next week,” said Peter Hug, global trading director at Kitco Metals.

As for other metals, May copper HGK8, -1.12%  fell 1% to $3.128 a pound. April platinum PLJ8, -0.73% lost 0.5% to $956.90 an ounce, while June palladium PAM8, -0.45%  slipped 0.4% to $981 an ounce.

Among exchange-traded funds, the silver-focused exchange-traded iShares Silver Trust SLV, -1.06%  fell 0.8% and the SPDR Gold Shares GLD, -0.74% was down 0.6%. The VanEck Vectors Gold Miners ETF GDX, -1.22% shed 1%.


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