Gold futures experienced a second consecutive decrease on Tuesday due to disappointing economic data from China, a credit rating warning for U.S. banks, and weak corporate earnings. As a result, investors sought the safety of the U.S. dollar and Treasuries.
Price Action
- Gold for December delivery (GC00, -0.36% GCZ23, -0.36%) dropped by $5.20, or 0.3%, to $1,964 per ounce on Comex.
- Silver futures for September delivery (SI00, -0.89% SIU23, -0.89%) fell by 16 cents, or 0.7%, to $23.07 per ounce.
- Palladium futures for September (PA00, -2.36% PAU23, -2.36%) declined by $24.20, or 2%, to $1,212 per ounce.
- Platinum futures for October (PL00, -1.86% PLV23, -1.86%) fell by $15.20, or 1.6%, to $911 per ounce.
- Copper futures for September (HG00, -2.44% HGU23, -2.44%) decreased by 9 cents, or 2.3%, to $3.75 per pound.
Market Drivers
China reported a significant drop in exports during July. Moody’s Investors Service also downgraded the credit rating of a few U.S. banks, and United Parcel Service Inc., considered an economic growth indicator, lowered its full-year guidance.
This news negatively impacted stocks and caused U.S. equity futures to decline in premarket trade, with S&P 500 index futures down 0.7% at 4,503. Amid this risk-off sentiment, investors favored the U.S. dollar and bonds over gold, resulting in lower yields. However, gold held relatively steady.
The ICE U.S. Dollar Index DXY, which measures the greenback’s strength against major currencies, increased by 0.5% to 102.54.
Meanwhile, the yield on the 10-year Treasury note BX:TMUBMUSD10Y dropped by 9.5 basis points to 3.994%, falling below the closely watched 4% threshold.
“Despite broad dollar strength, gold is holding nicely considering all the selling that is hitting the other commodities. If the global economic outlook deteriorates further, gold should catch a bid here,” commented Edward Moya, senior market analyst at OANDA.
