Gold attempts rebound after marking 2018’s lowest settlement
Gold futures edged higher early Monday, aiming for a rebound from a drop that took the commodity to the lowest close of 2018, as U.S. government bond rates retreated and as trade tensions elevated global uncertainty, providing support for bullion prices.
August gold GCQ8, +0.42% picked up $4.90, or 0.4%, to $1,283.40 an ounce, after booking the lowest settlement since December and producing a roughly 1.9% weekly decline on Friday.
Benchmark Treasury rates were retreating. The 10-year Treasury note yield TMUBMUSD10Y, -0.22% slipped to 2.911% on Monday, from 2.926% late Friday in New York, offering some support to gold, which doesn’t offer a yield. Lower yields can make gold comparatively more attractive.
Friday’s drop for the metal came as the U.S. dollar marked a 1.3% weekly gain, following a series of central-bank gatherings. A key move was the European Central Bank’s policy decision on Thursday to eventually unwind its crisis-era, easy-money programs but hold its benchmark rates at lower levels for a longer period than the market had expected. That resulted in a tumble for the euro EURUSD, +0.0775% against the buck.
The ICE U.S. Dollar Index DXY, -0.14% a measure of the dollar against a half-dozen major currencies, most recently was little changed at 94.796, but holding near 2018 highs.
In recent trade, however, global markets have focused on an import tariff spat between the U.S. and China. The hostilities have shown signs of devolving into a full-blown trade war, raising questions about the outlook for economic global growth if the two largest economies, China and the U.S., lock horns.
On Thursday, President Donald Trump announced levies of 25% on $50 billion worth of Chinese imports, drawing an in-kind response from Beijing.
“Last week’s dollar strength broke the bull’s back, hip and wrists, with a significant decline on Friday…” wrote Rick Bensignor, president at Bensignor Strategies, in a Monday research note.
Bensignor said that after gold flirted with prices around $1,350 without breaking out, it implied that the metal might struggle and could be vulnerable to a “catalyst.” That now leaves gold with a drop to around $1,250 or $1,235 possible, he said.
Meanwhile, July silver SIN8, +0.79% rose 13 cents, or 0.8%, at $16.615 an ounce, after registering a 1.6% weekly decline on Friday.
Mark DeCambre is MarketWatch's markets editor. He is based in New York. Follow him on Twitter @mdecambre.
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