Gold price at fresh lows for the month as dollar’s win streak expands
London (Sept 27) Gold fell for a second-straight session Wednesday as stocks and the dollar aimed higher while markets awaited details on U.S. tax reform.
That sets the yellow metal on a course to finish at a fresh September low.
December gold GCZ7, -0.69% traded down $7.30, or 0.6%, to $1,295.80 and has so far moved as low as $1,288.80 intraday. THE SPDR Gold Trust exchange-traded fund GLD, -1.12% traded 0.3% lower premarket.
The greenback continued to rise on Wednesday, with a key dollar index jumping to a more than one-month high as investors looked ahead to President Donald Trump’s announcement on tax reforms accompanied with an expected dose of uncertainty around how to fund the changes.
The ICE Dollar Index DXY, +0.45% climbed 0.4% to 93.344, trading around the highest levels since Aug. 23, according to FactSet data. The index, which measures the buck against a basket of six other currencies, now has risen for three days straight.
A strengthening buck makes it more expensive for holders of other currencies to buy dollar-denominated commodities, including gold.
U.S. stock futures on Wednesday pointed to a small rise at the open, as analysts said the market is stabilizing after a four-session skid for the Dow industrials. The return to a risk-on attitude in the market tends to depress demand for haven gold.
Gold finished with a loss Tuesday, pressured as comments by Federal Reserve Chairwoman Janet Yellen that reinforced expectations for another interest-rate increase before the end of the year, and as the Fed has recently affirmed its expectations for several more hikes, if still slowly evolving, in 2018.
Rising real interest rates lower 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.
“Gold is currently showing no signs of support. For the second time in as many weeks, the metal is threatening to break the lower bound of key support between $1290 and $1295 [for spot pricing], an area which was formerly resistance,” said Fawad Razaqzada, technical analyst with Forex.com. “If the sellers win the battle here, they will still need to push gold below the $1276 level to confirm the bearish reversal.”
But beyond the technical factors, and the influence of other financial markets, some physical demand factors could come into play.
“Gold may find additional boost from changes in its physical supply and demand forces,” said Razaqzada. “With Indian wedding season, for example, about to start, jewelry demand could easily rise over the next three months or so.”
December silver SIZ7, -0.02% steadied in early trading, at $16.885. It ended at $16.883 an ounce—its lowest since mid-August—on Tuesday. The iShares Silver Trust ETF SLV, -1.85% was also little changed.
Analysts at Commerzbank pinned silver’s relative stability on Chinese data.
Unlike gold, China has been importing noticeably more silver for several months now, they said in a note. According to data from the customs authorities, August silver imports soared by 68% year-on-year to 422 tons. Silver imports were already 45% or 860 tons above the year-on-year level in the first eight months of the year.
Across other metals trading, December copper HGZ7, +0.79% was up 2 cents, or 0.9%, at $2.9455 a pound. January platinum PLF8, -0.38% which is now the most active, shed 50 cents, or less than 0.1%, to $928.20 an ounce. December palladium PAZ7, -0.37% traded at $914.20 an ounce, down 25 cents, or less than 0.1%.
MarketWatch
