Gold futures on Tuesday settled in negative territory, giving back the bulk of gains from a day earlier that landed the metal at its highest finish in about a month. Stocks and other assets perceived as risky regained some footing higher on the session, dulling the appeal of the haven metal.
April gold GCJ9, -0.46% on Comex declined by $7.60, or 0.6%, to settle at $1,315 an ounce. The contract rose 0.8% Monday to finish at $1,322.60 — the loftiest close for a most-active contract since Feb. 26, according to FactSet data. The Monday gain followed a third straight weekly climb for the precious metal through Friday.
The gold-backed SPDR Gold Shares exchange-traded fund GLD, -0.41% was down 0.6% in Tuesday dealings.
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U.S. benchmark stock indexes rose Tuesday as investors attempted to shake off global growth worries and focus on a resumption of U.S.-China trade negotiations. The ICE U.S. Dollar Index DXY, +0.07% edged up by 0.2% to 96.708. A stronger dollar typically pressures gold prices, which is usually priced in dollars.
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Trey Reik, senior portfolio manager, at Sprott Asset Management USA, Inc. sees four persistent issues remaining key supportive factors for a “strong performance in the gold complex in coming weeks,” he said in a client note. The four events are a dovish take from Fed Chairman Jerome Powell’s press conference earlier this month, weaker factory data out of the eurozone, the inversion of the Treasury yield curve and the U.S. budget deficit setting a single month record.
“Because we have focused for so long on identifying signals of incipient monetary and financial stress, it seems patently clear to us that due to insufficient central bank liquidity, the global financial system is starting to freeze up,” he said. “We would suggest that events of the past week serve as further evidence that a perfect storm of global fundamentals appears to be gathering in gold’s favor.”
The 10-year U.S. government bond yield TMUBMUSD10Y, +0.40% fell to 2.453% Friday, trading beneath the yield on the 3-month T-bill and inverting that important part of the yield curve for the first time since 2007. Yields fall as bond prices rise. The yield declined to $2.418% Monday to its lowest since late December 2017. It climbed Tuesday to trade at $2.420%.
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U.S. economic data Tuesday were downbeat, with construction on new homes down almost 9% in February to an annual pace of 1.16 million, holding well below year-ago levels. The consumer confidence index dropped to 124.1 in March, the second-lowest rate in a year, from 131.4 in February. The economic data fed uncertainty over the outlook for the economy.
On Comex, May silver SIK9, -0.85% shed 0.9% to $15.429 an ounce, while May copper HGK9, +0.28% lost almost 0.1% to $2.854 a pound.
April platinum PLJ9, +0.26% added 0.2% to $859.80 an ounce, but June palladium PAM9, -1.88% declined by 1.8% to $1,515.90 an ounce.