Gold futures made modest moves Wednesday, finding support from some weakness in the dollar, though a decline in the latest wholesale inflation data did little to sway expectations for further Federal Reserve interest-rate hikes.
December gold GCZ8, +0.57% added a dime to $1,202.30 an ounce, a day after posting the first gain in three sessions.
The yellow metal has been buffeted by concerns about rising interest rates and fears that clashes between the largest superpower powers could lead to slack in demand for the metal. Thus far tit-for-tat tariff disputes between Washington and Beijing have supported gains in the U.S. dollar, pressuring commodities that are typically priced in the currency.
Other metals that tend to be sensitive to trade spats copper and silver were seeing muted action.
December silver SIZ8, +0.76% was up less than 0.1% at $14.165 an ounce, while December HGZ8, +2.35% added 0.6% to reach $2.637 a pound.
“U.S. and China trade wars are affecting the demand for gold as investors turn to the U.S. dollar in faith that the trade dispute will take least effect on the United States,” said Naeem Aslam, chief market analyst with Think Markets. “The result of this harms the [Chinese] yuan as it weakens the currency.”
A stronger dollar also makes gold more expensive for China, the world’s biggest consumer of gold, and that could drive demand lower, he said.
The ICE U.S. Dollar Index DXY, -0.23% eased by 0.3% in Wednesday dealings, but has climbed more than 3% year to date.
Meanwhile, U.S. interest-rate hikes are “due to commence this September which is additionally pushing investors towards the greenback,” said Aslam. “This in turn continues to make the gold prices weaker.”
“Investors are also aware that another rate hike is believed to be scheduled for December,” said Aslam. “The strength of this rate hikes being carried out depends upon the economic data.”
On Wednesday, data showed that the U.S. producer-price index declined by 0.1% last month, contrary to the 0.2% increase expected by economists polled by MarketWatch.
The drop in wholesale prices was the first since February 2017, but the booming U.S. economy has produced enough inflation to push the Fed into a somewhat more aggressive posture.
The policy-setting Federal Open Market Committee is set to conclude a two-day meeting on Sept. 26, with expectations that the FOMC will lift rates by a quarter of a percentage point.
Elsewhere on Comex, October platinum PLV8, +0.96% added 0.7% to $795 an ounce, while December palladium PAZ8, +0.61% rose 0.6% to $967.20 an ounce.
Among the exchange-traded funds, the SPDR Gold Shares
GLD, +0.69%
traded little changed, while the iShares Silver Trust
SLV, +0.83%
fell 0.1%. The VanEck Vectors Gold Miners ETF
GDX, +2.90%
added 0.5%.
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