Gold prices settle lower after upbeat data on the U.S. economy

Gold prices settle lower after upbeat data on the U.S. economy

Palladium logs 3rd gain in 4 sessions

Gold fell Wednesday, pressured after a small upward revision to second-quarter U.S. gross domestic product data, as a leading dollar index stabilized near a one-month low, helping to send prices for the metal down a second straight session.

December gold GCZ8, -0.45% fell $2.90, or 0.2%, to settle at $1,211.50 an ounce, trading around 0.1% lower for the week so far. The ICE U.S. Dollar index DXY, +0.26% was down 0.1% at 94.614 after tapping a high of 94.932. It’s still down about 0.6% week to date, but has gained 0.1% so far in August.

Moves in the greenback came as investors digested an upward revision to second-quarter GDP, running at a 4.2% clip. Data on July pending home sales, meanwhile, showed a decline of 0.7% in July. The sector has recently logged a number of weak data points, including an existing-home sales drop to a 2 1/2-year low.

“Gold is facing headwinds on higher Q2 GDP reading of 4.2%, up slightly in the first revision along with news of U.S.-Canada resuming trade negotiations, which is impacting equity markets positively [and] tempering any interest in safe haven assets,” said Jeff Wright, executive vice president of GoldMining Inc.

“One longer term positive take away is if/when [the] U.S. and Canada can come to agreement. This should temper the U.S. dollar rally YTD, which has been a major impediment for gold in 2018,” he said.

Gold often trades higher when the dollar weakens, and vice versa, because the precious metal is most actively traded in the greenback. The dollar has been the primary driver for gold action in 2018, with the precious metal down about 8% this year through August. With the dollar now churning over recent sessions, however, gold had largely stabilized above $1,200 since grazing a 1 ½-year low in the middle of August.

“The bull run for gold has been very short-lived. One of the reasons that we have seen weakness in the gold price is because the U.S. economy is standing on robust ground and consumers are feeling confident about this as was evident in yesterday’s economic data,” said Naeem Aslam, chief market analyst with Think Markets.

“The most vital factor in play is the [Federal Reserve] rate-hike cycle. The rate hikes are pushing the dollar higher and for investors dollar is the more favorite instrument,” he said.

The Fed is expected to nudge its benchmark interest rate higher next month and again in December, plus follow up with additional moderate rate tightening in 2019, though the panel has recently noted bubbling concern for a trade-impacted economic slowing.

Gold has also been contained as riskier asset classes shine. Major U.S. stock indexes aimed for their fourth straight advance Wednesday.

From a technical point of view, the first support for gold is at $1,200, while the next key level is $1,180, said Carlo De Casa, chief analyst at ActivTrades, in a daily email. “A rise above $1,210 would be a first positive impulse, with a potential target at $1,230.”

Among the exchange-traded funds, SPDR Gold Shares GLD, -0.49% added 0.4% Wednesday. The VanEck Vectors Gold Miners ETF GDX, -1.40% was up less than 0.1%.

In other metals trading, December silver SIU8, -1.34% eased 7.7 cents, or 0.5%, to $14.697 an ounce. High-grade copper for December HGU8, -1.35% retreated from Tuesday’s gain, last down nearly 1% at $2.71 a pound. October platinum PLV8, -0.58% added 0.1% to $796.60 an ounce and December palladium PAU8, -0.21% rose 2% to $958.50 an ounce.

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