Gold futures declined modestly Tuesday, at risk of finishing below $1,300 an ounce for a third straight day as a tech-led run for stocks and a stable dollar cut into investment interest in the precious metal.
A wait-and-see mood had a grip on a quiet market, with investors awaiting the latest on trade and geopolitical developments.
“Concerns over the path of protectionist policies that the U.S. is taking could resurface as the [Group of Seven] prepares to meet in Canada this week, whilst there remains a lack of progress in discussions between U.S. and China over trade relations,” said Richard Perry, analyst at Hantec. “This is leading to a degree of consolidation across forex and commodities markets.”
August gold GCQ8, -0.20% slipped $2.20, or 0.2%, at $1,295.10. Its settlement Monday at $1,297.30 marked the lowest finish since May 23.
U.S. stocks tipped higher after the technology-studded Nasdaq Composite on Monday closed at a record for the first time in nearly three months and investors around the globe generally took on the riskier asset markets.
The benchmark ICE U.S. Dollar Index DXY, +0.05% steadied near 94.02. The yield on the benchmark 10-year Treasury note TMUBMUSD10Y, -0.84% slipped 2 basis points to 2.922%, a mildly supportive factor for gold.
Investors appeared to be putting trade tensions aside, even after trade talks broke down between the U.S. and China over the weekend. But leaders of the Group of Seven nations will hold talks in Canada on Friday and Saturday, where tariffs and trade are likely to be discussed. This weekend’s rebuke by G-7 finance ministers of the Trump administration’s trade tariffs could add some stress to the gathering.
On the economic front, the Markit services purchasing managers index for May will be released at 9:45 a.m. Eastern Time, following by the ISM’s services index for May and job openings for April at 10 a.m. Eastern.
Data last week showed that the U.S. created 223,000 new jobs in May, pushing unemployment down to an 18-year low of 3.8%. That news reinforced expectations the Federal Reserve will move to raise interest rates at least two more times in 2018 following its March rate increase, possibly as soon as this month, while also boosting the odds of a third additional rate rise back to around 40%, according to Fed funds futures.
Rising real interest rates impact the opportunity costs of holding gold because the metal provides no yield, and entices investors to rotate into riskier assets like stocks. Higher rates may also boost the value of the dollar, which usually moves in the opposite direction of the gold price.
In other metals trading, July silver SIN8, -0.25% eased 0.2% at $16.395 an ounce. July copper HGN8, +0.43% changed hands at $3.1505 a pound, up 0.5%. July platinum PLN8, -1.05% fell nearly 1% to $894.90 an ounce, while September palladium PAU8, -1.19% shed 1.1% to $983.10 an ounce.