Gold futures headed sharply lower on Monday, failing to derive support from a weaker U.S. dollar or a selloff that was taking shape in global markets to start a week that appears rattled by worries about growing evidence of rising cases of coronavirus.
Some market participants said the downturn in bullion may signal the momentary uneasiness by investors around the pandemic but the failure of the dollar to rise as it did during the rout for financial markets in March may signal that the apparent deterioration in the appetite for risk on Wall Street may be a temporary one.
Raffi Boyadjian, senior analyst at XM, in a Monday research note, said that “the greenback appeared to lose some steam, which perhaps is an indication that this risk-off episode may be nothing more than temporary market jitters.”
The dollar was down 0.2% at 97.169, as measured by the ICE U.S. Dollar Index DXY, -0.38%, a gauge of the buck against a half-dozen rivals.
August gold GCQ20, -0.53% was down $27.30, or 1.5%, at $1,710 an ounce on Comex, according to FactSet data. The yellow metal saw a weekly gain of 3.2% based on last Friday’s settlement of the most-active contract.
Meanwhile, July silver SIN20, -0.49% shed 40 cents, or 2.3%, at $17.08 an ounce, with the metal finishing almost unchanged for the week.
“On this day traders appear more focused on the bearish prospects of reduced consumer demand for precious metals due to hobbled economies, than on their safe-haven aspects,” wrote Jim Wyckoff, senior analyst at Kitco.com.
A report showing business activity steadied in New York state in June after two months of record contractions also may be creating some headwinds for precious metals. The Empire State business conditions index rose 48 points to negative 0.2 in June. A reading so close to zero indicates steady conditions. Economists had expected a reading of negative 30, according to a survey by Econoday.
Market participants have been attuned to coronavirus cases that have started to surge once again. The most worrying element is a considerable surge in numbers in China, where the disease was first identified and a rise in infections in a number of U.S. states.
However, investors have been bullish on assets considered risky, like stocks, as reopenings continue to gradual open up an economy that has been stultified by the epidemic.
Other metals moved lower on Comex Monday, with July copper HGN20, -1.30% down 1.9% to $2.5505 a pound. July platinum PLN20, +0.09% lost 2% to $802.80 an ounce and September palladium PAU20, +0.22% shed 1.7% to $1,904.90 an ounce.
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