Commodity Blog

As a plethora of positive economic news comes pouring in and the US dollar tumbles, gold futures are trading flat to kick off the trading week. Can the precious metals rebound this week from their worst 2018 settlement levels?

August gold futures dipped $0.50, or 0.04%, to $1,240.70 per ounce at 14:11 GMT on Monday. The yellow metal, which recorded a 1.2% loss last week, has not traded this low since July 2017. Year-to-date, gold prices have plunged 6%, enduring most of those declines over the last three months.

Silver is also trading sideways to commence another week of trading. September silver futures slid $0.01, or 0.06%, to $15.80 an ounce. The white metal also notched a weekly drop of 1.4%, contributing to its year-to-date losses of 8.1%.

Metal commodity traders are paying attention to multiple news events occurring this week.

President Donald Trump is in Helsinki to meet with Russian President Vladimir Putin to discuss behind closed doors trade, geopolitical issues, election meddling, and military. A second bilateral meeting was also held with aides from both nations. The president called the talks a “very, very good start for everybody.”

On the economic front, US business inventories rose 0.4% in May and retail sales advanced 1.4%, reports the Department of Commerce. The inventory-to-sales ratio decreased to 1.34 from 1.35 – the number of months it would take to sell all the inventory in stock. The retail sales figure beats estimates from economists who forecast an increase of just 0.5%.

Moreover, auto sales jumped 0.9%, service station receipts rose 1%, building material stores recorded an 0.8% boost, apparel sales fell 2.5%, and online activity spiked 1.3%.

Observers expect a strong gross domestic product (GDP) reading in the second quarter. The April-to-June numbers will be released later this month.

The US dollar did not seem to be affected by the upbeat economic data or the Trump-Putin summit. The greenback shed 0.34% to 94.51, bringing its year-to-date gains to 2.5%. A weaker buck is good for commodities pegged in dollars because it makes it cheaper for foreign investors to purchase.

Goldbugs will now look ahead to this week’s semi-annual testimony from Federal Reserve Chair Jerome Powell. The market will comb through any hints that Powell may provide pertaining to raising interest rates in 2018. Analysts are confident that the US central bank will pull the trigger on two more rate hikes this year – one in September and another in December. The yellow metal is typically sensitive to a rising-rate environment because it lifts the opportunity cost, sending investors into yield-bearing assets.

In other metals markets, September copper futures slumped $0.013, or 0.49%, to $2.76 a pound. September platinum futures slipped $5.50, or 0.66%, to $824.80 per ounce. September palladium futures plummeted $12.60, or 1.35%, to 920.20 an ounce.

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