• Gold prices marked their lowest settlement in five weeks on Tuesday, as comments from Federal Reserve officials raised expectations for further increases in interest rates this year.
• The U.S. dollar strengthened against that backdrop, dulling the investment appeal for the precious metal.
• August gold GCQ7, +0.23% fell $3.20, or 0.3%, to settle at $1,243.50 an ounce after suffering a decline of 0.8% Monday. Prices ended at their lowest since May 16, according to FactSet data.
• Economic and interest-rate policy uncertainty will continue to hold sway over metals and currency trading. This week’s economic data releases include leading economic indicators Thursday and Markit manufacturing PMI Friday.
• But with a “lack of any major economic data this week, it remains to be seen if the dollar will be able to climb further, and what that would mean for gold,” said Fawad Razaqzada, technical analyst at Forex.com.
“In the event that the dollar manages to extend its gains further, then buck-denominated precious metal could come under additional pressure,” he said. “However, an exception to that rule would be if we head into a period of stock market turbulence, which may boost the appetite for perceived safe-haven assets like gold and silver.”
For now, “it looks like investors still prefer the racier equity markets over holding on to gold, an asset which pays no interest or dividend, and costs money to store,” said Razaqzada. “When you factor into that equitation the prospects of a firmer dollar going forward, the outlook for the yellow metal appears grim.”
• Among a long lineup of Fed speakers this week, Boston Fed President Eric Rosengren said Tuesday that low interest rates do pose financial stability concerns that central bankers and the private sector must take seriously.
• New York Fed President William Dudley, a voting member of the Fed’s policy-setting committee, said Monday that he viewed the U.S. economic outlook as “pretty good”—a comment that was read by investors as offering support to the Fed’s recent monetary-policy normalization initiative. Higher rates make gold and other commodities, which don’t bear yields, less appealing.
• “Although the ongoing uncertainty over Brexit talks and political uncertainty in the U.S. may support the commodity in the medium to longer term, short-term bears still remain in control below $1,260,” said Lukman Otunuga, research analyst at FXTM. “From a technical standpoint, gold is pressured on the daily charts, with bears eyeing $1,240.
• Gold saw little, if any, impact from House Speaker Paul Ryan’s speech on tax reform Tuesday, as U.S. equities extended moderate losses.
• Meanwhile, July silver SIN7, +0.29% fell 8.5 cents, or 0.5%, %, to end at $16.417 an ounce.
Reference: Market Watch
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