Gold prices settled lower on Monday following their biggest weekly advance since April as weaker-than-expected GDP data out of China weighs on commodities prices.
Price action
-
Gold futures for August delivery
GC00,
+0.58% GCQ23,
+0.58%
fell by $8, or 0.4%, to settle at $1,956.40 per ounce on Comex. -
Silver futures for September
SI00,
+0.33% SIU23,
+0.33%
fell by 18 cents, or 0.7%, to $25.02 per ounce. -
September palladium
PAU23,
+1.16%
added $14.70, or 1.2%, to $1,281.10 per ounce, while October platinum
PLV23,
-0.06%
climbed $3.20, or 0.3%, to $987.50 per ounce. -
September copper
HGU23,
-0.70%
declined by 9 cents, or 2.3%, to $3.84 per pound.
Market drivers
China’s GDP grew at a below-expected rate of 6.3% during the second quarter, slower than the 7.3% consensus reading from economists polled by FactSet.
Prices of commodities, including crude oil and gold, tumbled after the data were released as investors bet slowing growth in China would weigh on demand.
“Gold is continuing to hold above $1,950 an ounce with investors and traders still wary of committing fully to equities with the latest Chinese data adding to concerns about the health of the global economy,” said Rupert Rowling, market analyst at Kinesis Money.
A falling U.S. dollar and lower Treasury yields helped drive a 1.7% weekly rise in gold futures last week after data showed a slowdown in U.S. inflation.
In Monday dealings, the ICE U.S. Dollar Index
DXY,
a gauge of the buck’s strength against a basket of rivals, was little changed 99.879 after dropping last week to its lowest level in more than a year. The yield on the 10-year Treasury note
TMUBMUSD10Y,
was down by 1.1 basis points to 3.8068%.
“When it comes to the price of gold, traders continue to remain very attached to the [Federal Reserve’s] monetary policy stance,” said Naeem Aslam, chief investment officer at Zaye Capital Markets, in market commentary.
The slowdown in inflation suggests that the “massive pressure” that was on the Fed to tame inflation is no longer there, he said. “This means that the Fed doesn’t need to be aggressive with its monetary policy, and this also means that there is no strong need for the Fed to hike interest rates any further.”
Many do believe that there is a possibility of one more rate hike from the Fed, which “could bring one final threat to the gold price,” but looking at the price action of the precious metal, “we think that it is safe to say that there are more bulls than bears in the market,” said Aslam. Based on the most-active contract, gold futures on Friday reached their highest settlement since mid-June, FactSet data show.
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