Gold heads lower after previous session’s gains as dollar perks up

Gold futures headed lower Tuesday, following moves in the dollar that have weighed on the precious metal in recent weeks amid concerns about trade wars between economic superpowers and tightening monetary policy in the U.S.

August gold GCQ8, -0.44% lost $5, or 0.4%, to $1,254.60 an ounce after tacking on 0.3% in the previous session. The most popular fund tracking gold, the SPDR Gold SharesGLD, -0.32% was trading 0.3% lower.

September silver SIU8, -0.40% traded 3.9 cents, or 0.2%, lower at $16.10 an ounce. The iShares Silver Trust SLV, -0.40%shed 0.5%.

A strengthening dollar proved the most significant headwind for precious metals on Tuesday with one measure of the buck, the ICE U.S. Dollar IndexDXY, +0.31% which reflects the greenback’s performance against a half-dozen currencies, rising by 0.3% to 94.319.

Gold on Monday accumulated modest gains even as the buck rose, but Tuesday’s moves put the dollar gauge on pace to rise 0.3% for the week thus far.

Bullion has mostly been in a downtrend that has caused investors and technical analysts to maintain a bearish outlook for the asset that should ordinarily prosper during times of uncertainty, including a spat over trade disputes between the U.S. and its trade partners across the globe. However, the haven asset has shed some of its usual flight-to-safety luster so far.

That downdraft also comes as the Federal Reserve is slated to normalize U.S. monetary policy, lifting benchmark interest rates at least once more in 2018, with higher rates potentially creating more headwinds for gold as the dollar bucks up and as the 10-year Treasury rate TMUBMUSD10Y, -0.03% climbs, eroding some gold demand.

“After the dovishly interpreted jobs report Friday, this coming Thursday’s [U.S.] CPI report will be the next big catalyst for gold, and if it is ‘hot’, expect hawkish money flows, a rebound in the dollar and further pain for gold near term,” said Tyler Richey, co-editor of the Sevens Report. “Alternatively, a soft print could propel gold back towards the psychologically important $1,300 level.”

Meanwhile, copper prices eased back after Monday’s 0.9% rise. September copper HGU8, -0.74% traded at $2.833 a pound, down 0.6%.

Copper has fallen by over 50 cents “from peak to trough in less than a month through the end of last week,” said Richey, in Tuesday’s newsletter.

Monday’s “rebound was more of a dead-cat bounce driven by profit-taking in an overextended market then the beginning of a real price recovery, he said. “Copper’s recent break is a noteworthy warning sign for industrial metals, and subsequently is causing a lot of questions about the health of the global economy.”

Rounding out metals action, October platinum PLV8, -1.17% fell by 1.1% to $844.40 an ounce and September palladium PAU8, -1.42% declined by 1.3% to $942.20 an ounce.

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