On Tuesday, gold futures were on track during the most intense daily fall of about a month as the U.S. dollar strengthened and Treasury yields rose, weighing on the appetite for precious metals.
The weakness of gold is probably a “classic return” of an excessive reaction to the [Federal Reserve’s] it will likely hold up after a serious “shortfall” in the August U.S. payroll report, ”Zaner analysts wrote in Tuesday’s market comment.
US data released on Friday showed a lower-than-expected rise in new jobs in the United States in August, prompting precious metal prices to rise during the week and mark their highest point since mid-June.
On Tuesday, December GCZ21 golden,
GC00,
fell by $ 22.40, or 1.2%, to trade at $ 1,811.40 per ounce, putting the precious metal on track for the sharpest slide of a day for a contract most active since August 9, according to FactSet data. The drop comes after the 0.8% rise for bullion last week, and prices settled on a high on Friday since June 16th.
Traders expect a rebound in the dollar this week, Zaner analysts said. Investment interest in the fund traded on gold exchanges remains “very poor”, with the ETF’s total gold holdings at the end of last week down 6.8% year-on-year. U.S. Treasury yields jumped on Tuesday and official Chinese gold holdings fell 0.6% last month from July, they said.
The dollar, as measured by the ICE DXY US Dollar Index,
was trading at 92.39, up 0.4% on Tuesday’s trading. A stronger dollar can make assets priced in the currency, such as gold, less attractive to investors using other currencies.
Meanwhile, benchmark bond yields, which can compete for refuge flows against gold, were rising, increasing their attractiveness when faced with bullion. 10-year Treasury note TMUBMUSD10Y,
yielded 1.368%, up from 1.322% last Friday. Treasury markets closed Monday in celebration of U.S. Labor Day.
The gold trade has been seen in the context of concerns about the delta variant of COVID-19, which have supported its price movements and uncertainty about the Federal Reserve’s monetary policy plans, as the labor market recovery seems uneven. Some strategists argue that the fact that easy money policies have been maintained has helped equity markets rise repeatedly to highs, lowering bullion demand.
“Gold is finding new interest, but the precious metal is caught between a very confusing economic outlook and the incessant new record highs in equities,” wrote Adrian Ash, research director at BullionVault, in a research report.
Gold bulls argued Tuesday’s slide represented investors taking profits after last week’s solid rebound.
Alex Kuptsikevich, senior financial analyst at FxPro, said gold supporters should be encouraged by his ability to stay above the psychologically significant level at $ 1,800.
The analyst said gold imports remain strong and speculated that demand would rise in bullion during periods of seasonal price strength, including Christmas.
“It is also worth noting that in August, the volume of gold imports reached the highest levels in the last five months … Favorable conditions for this were created by high market demand and attractive prices, which also caused jewelers to increase purchases in advance of the upcoming Christmas season, ”Kuptsikevich said in a note.
Meanwhile, silver for December delivery SIZ21,
traded 23.7 cents, or 1%, less than $ 24.57 an ounce.
Copper of December HGZ21,
it also fell 0.9%, to $ 4.30 a pound. October platinum PLV21,
released 0.7% to $ 1,1014.10 an ounce and December PAZ21 palladium,
it was trading at $ 2,374.50 an ounce, down 1.7%.