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Gold Falls on Higher US Dollar, Booming Economic Data

September 14, 2018 at 15:46 by Andrew Moran

Gold futures are sliding at the end of the trading week, stemming from a higher US dollar and positive economic reports. The yellow metal is on track for a relatively flat week, buoyed by modest gains earlier in the week, as it is flirting with the $1,200 threshold once again.

December gold futures shed $6.60, or 0.55%, to $1,201.80 per ounce at 15:21 GMT on Friday. Gold prices are poised for a weekly jump of 0.04%. The precious metal is still down 10% year-to-date.

The sister commodity to gold, silver, is also plunging to finish the trading week. December silver futures tumbled $0.09, or 0.57%, to $14.16 an ounce. The white metal will record a weekly decline of 0.5% and it is down 5% over the last month.

Investors are combing through the latest economic reports that will likely play a minor role in next week’s Federal Reserve policy meeting.

The August consumer price index (CPI) added 0.2%, which is less than the projected 0.3% monthly increase. Last month’s US industrial production figures spiked by a larger-than-expected 0.4%, the third-largest monthly increase. September consumer sentiment surged to 100.8, from 96.2 in August. August retail sales rose a tepid 0.1%, the weakest sales in six months.

These numbers helped the US dollar rally 0.29% to 94.81, but the greenback is down 0.58% for the week. Year-to-date, the currency has advanced 2.9%, down from more than 3% earlier this month. A stronger buck is bad for dollar-pegged commodities because it makes it more expensive for foreign investors to purchase.

With the US central bank likely to raise interest rates at the September Federal Open Market Committee (FOMC), hedge funds and money managers continue to enhance their short positions in gold and gold exchange-traded funds (ETFs), according to the US Commodity Futures Trading Commission (CFTC). Gold is generally sensitive to a rising-rate environment because it lifts the opportunity cost and sends investors into yield-bearing assets.

Analysts contend, however, that if gold prices stay around the important $1,200 mark, then it may suggest the market is still bullish on the metal.

In other metal commodities, December copper futures slid $0.01, or 0.37%, to $2.67 a pound. October platinum futures tacked on $1.10, or 0.04%, to $804.5 per ounce. December palladium futures edged up $6.30, or 0.65%, to $974.5 an ounce.

If you have any questions and comments on commodities today, use the form below to reply.

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