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Gold settles at 1-week high of $1,200 as Trump comments hurt the dollar
Gold prices climbed Tuesday to settle at the closely watched $1,200 level, What Is The Price Of 1 Dollar
Tuesday, helping to boost demand for dollar-denominated yellow metal, a day after
rose $5.40, or nearly 0.5%, to settle at $1,200 an ounce — the highest finish for a most-active contract in a week, according to FactSet data. A popular metals exchange-traded fund, the SPDR Gold Trust
The precious metal on Monday had climbed by $10.40, or roughly 0.9%, to log
, as prices bounced back from their worst weekly decline in more than a year.
A pullback for the previously robust dollar has largely explained gold’s latest move as the two have enjoyed an inverse relationship for the bulk of the year. Yet gains for gold came even as the S&P 500
which tends to move in the opposite direction of bullion,
Market participants attributed some of bullion’s recent gains to investors wagering that the commodity has achieved a tentative bottom. But several analysts, including Naeem Aslam, chief market analyst at Think Markets UK, have said gold needs to break above $1,200 and hold or Monday’s rally could be chalked up to a bull trap. Gold remains down around 9% year to date.
The dollar fell and gold gained Monday after reports that Trump criticized Powell for rate increases at a weekend fundraiser. In a subsequent Reuters interview, Trump again criticized the Fed chairman.
Attention could remain on central bank interest-rate policy as Powell and other central bankers gather for the Kansas City Federal Reserve’s annual symposium in Jackson Hole, Wyo., later this week The Fed is expected to raise rates next month and one more time this year, while continuing on a course of mild rate increases next year.
Here’s how Jackson Hole could impact the dollar, bonds and emerging markets
The ICE U.S. Dollar Index
a gauge of the currency against a half-dozen counterparts, was down 0.7% at 95.20 in Tuesday trading. Boosted by higher U.S. rates relative to other major economies in the world, however, the dollar has advanced 3.3% so far this year and 1.7% in August. A stronger U.S. currency can be a negative for gold because it makes dollar-pegged assets, like gold and silver, more expensive for buyers using other currencies. What Is The Price Of 1 Dollar
“There are points in time when gold is driven more by real rates [with nonyielding bullion giving way to higher-yielding investments], but right now correlation with the dollar is very high and will continue at least in the short term to drive gold trade,” said Marisa Hernandez, metals and mining equity analyst at Neuberger Berman.
Notably, there’s a key supportive factor for gold prices in play as well, she said: the cost curve for miners. Should gold linger in the $1,150 to $1,200 area, Hernandez said, miners won’t make enough to invest in pulling out more gold and will cut production. The market price would presumably level off again.
”The price can always dip below that [$1,150 to $1,200 range], but it shouldn’t be sustainable for a long period of time and that means you may not have a lot of downside for prices from here,” she said. “But you do need the dollar to be weaker for the gold price to rise significantly from here, too.”
Hernandez said $1,150 on the downside and $1,350 on the upside feels appropriate for gold for the foreseeable future, especially given current interest rates, inflation and dollar behavior.
Why gold has performed so poorly even though stock markets are volatile
Among other metals, high-grade copper for September delivery
added 2.7 cents, or 1% What Is The Price Of 1 Dollar , to about $2.696 a pound, while September silver
What Is The Price Of 1 Dollar , or nearly 0.7%, to $14.766 an ounce.
shed 90 cents, or 0.1%, to $793 an ounce, after plumbing lows not seen in a decade in recent sessions. September palladium
rose $11.30, or 1.3%, to $910 an ounce.
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