Gold futures settled lower for a second straight session on Tuesday as disappointing trade data from China, a credit rating warning for U.S. banks, and some weak corporate earnings resulted in some flight to the safety of the U.S. dollar and Treasuries.
Price action
-
Gold for December delivery
GC00,
-0.53% GCZ23,
-0.53%
fell by $10.10, or 0.5%, to settle at $1,959.90 per ounce on Comex. -
Silver futures for September delivery
SI00,
-0.18% SIU23,
-0.18%
fell by 42 cents, or 1.8%, to end at $22.81 per ounce. -
Palladium futures for September
PA00,
+1.43% PAU23,
+1.43%
declined by $18.10, or 1.5%, to finish at $1,218.10 per ounce, while platinum futures for October
PL00,
-1.13% PLV23,
-1.13%
fell by $22.70, or 2.5%, ending at $904.20 per ounce. -
Copper futures for September
HG00,
+0.62% HGU23,
+0.62%
declined by 7 cents, or 1.8%, to settle at $3.77 per pound.
Market drivers
Risk appetite receded on Tuesday following the news that China’s exports and imports contracted more than expected in July, government data showed. The country’s exports plunged 14.5% for the year to July, the biggest decline since the outbreak of the COVID-19 pandemic in February 2020, while imports slid 12.4%, worse than forecast.
Meanwhile, Moody’s decisions to put a handful of major U.S. banks on review for a possible downgrade and lower debt ratings on several small and midsize banks, as well as United Parcel Service Inc.
UPS,
‘s cut to its full-year outlook also added to the risk-off mood.
See: 10 regional banks expected to buck a weak industry trend
Amid the risk-off sentiment, investors appeared to favor the U.S. dollar and bonds over gold as yields declined, while the yellow metal traded modestly lower.
The ICE U.S. Dollar Index
DXY,
a gauge of the greenback’s strength against major currencies, rose 0.5% to 102.53. The yield on the 10-year Treasury note
BX:TMUBMUSD10Y
was off by 5 basis points at 4.035%, according to FactSet data.
“Despite broad dollar strength, gold is holding nicely considering all the selling that is hitting the other commodities. If the global economic outlook deteriorates further, gold should catch a bid here,” said Edward Moya, senior market analyst at OANDA, in emailed commentary.
U.S. stocks remained under pressure on Tuesday despite a brief respite from last week’s selloff in the previous session. The S&P 500
SPX
and the Dow Jones Industrial Average
DJIA
each shed 0.7%, while the Nasdaq Composite
COMP
dropped 1%.
The CBOE Market Volatility index, Wall Street’s fear gauge, surged to a two-month high at 16.94, according to FactSet data.
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