Gold futures relinquished modest early gains on Tuesday to end lower for a second straight session, as buoyancy in global stock markets pressured prices for the metal.
Jim Wyckoff, senior analyst at Kitco.com, attributed the turn lower to “just normal profit taking by the shorter-term futures traders in an overall price uptrend.”
Gold for August delivery GCQ20, -0.73% on Comex lost $16.30, or 0.9%, to settle at $1,734 an ounce after declining by less than 0.1% on Monday. July silver SIN20, -0.74% dropped 57 cents, or 3%, to $18.26 an ounce, more than erasing the 1.8% rise it scored a day earlier.
“Every fundamental signal for gold was bullish earlier [Tuesday],” said Jeff Wright, executive vice president of GoldMining Inc. The “sudden reversal is contrarian and profit taking,” he speculated.
“Gold has been steady through protests turning into riots around the country, U.S.-China tensions are still rising, not getting better,” he told MarketWatch.
Investors remain wary of rising Sino-American trade tensions even as the economies reopening from forced closures due to the COVID-19 pandemic have dulled some of the safe-haven luster from the commodity.
“The yellow metal sees support near the $1,725 per ounce, even though the buyers lose appetite approaching the $1,750 mark on uncertainty regarding a renewed risk selloff despite unpromising news from the U.S., China front,” wrote Ipek Ozkardeskaya, senior analyst at Swissquote Bank.
Dollar-pegged commodities have been buttressed from a weaker greenback, which precious metals are priced in. The ICE Dollar Index DXY, -0.20%, a gauge of the buck against a half-dozen currencies, was down 0.1% on Tuesday and has declined 0.7% over the past two sessions to 97.72. A weaker buck can make assets priced in the currency more appealing to buyers using other monetary units.
Bullion prices were facing some headwinds from a continued revival in investor appetite for stocks as they climb back from a March rout induced by fears about the dire economic implications of the spread of the novel strain of coronavirus and the effects of measures to curtail the infection.
Global equity markets climbed Tuesday and U.S. benchmark stock indexes were higher as gold futures settled, undercutting some demand for the metal.
Meanwhile, economic stimulus measures enacted by the Federal Reserve, including near-zero interest rates, and fiscal stimulus around the globe have, overall, supported bullion buying, experts said.
Rounding out metals action on Comex, July copper HGN20, 0.38% added 0.8% to settle at $2.491 a pound. July platinum PLN20, -1.24% shed 3.6% to $868.70 an ounce, while September palladium PAU20, -0.65% lost 0.3% to finish at $1,982.60 an ounce.