Gold set to slip a second session in a row, held in check by surging dollar

  • Written by MarketWatch
  • Published in Economics

Gold futures early Tuesday looked set to trade lower in back-to-back sessions as a richer dollar traded at levels last seen in December.

Financial markets awaited the expected 2 p.m. Eastern Time announcement from President Donald Trump on the fate of the Iran nuclear deal and its implications for crude-oil and stock-market trading, which could influence the next move for haven precious metals.

June gold GCM8, -0.22%[1] fell $3.80, or about 0.2%, to $1,310.30 an ounce. It declined modestly on Monday[2] as well, after prices last week touched a roughly two-month low.

“Gold is still being kept in check by the firm U.S. dollar, which has profited from the widening of interest-rate differences between the U.S. and Europe,” said Carsten Fritsch, commodities analyst at Commerzank. “The interest advantage of U.S. Treasurys TMUBMUSD10Y, +0.16%[3]  over German government bonds FGBLM8, -0.14%[4]  is at its highest level in 29 years.”

The ICE U.S. Dollar Index DXY, +0.35%[5] which measures the buck against six rivals, rose to 93.005 from 92.762 late Monday in New York, extending its recent advance to levels last seen in December[6]. A steeper buck tends to turn off investors using other currencies to dollar-priced gold.

Read: First-quarter global gold demand drops to lowest in a decade: report[7]

Also see: Billionaire girds for stock-market crash by investing half his net worth in gold[8]

Traders are watching for Trump’s decision on Iran because abandoning the Obama-era deal would presumably trigger a reimposition of economic sanctions on the Middle Eastern country. That could cut into global supplies for oil, providing support for crude prices CLM8, -1.02%[9] which on Monday hit a 3 ½-year high before pulling back Tuesday. The stock market has so far had a mixed reaction [10]to impending Iran sanctions.

Notably, “gold priced in euros trades at a four-month high with the Iran sanctions threat and China trade woes providing the metal with a defense against the stronger dollar,” said Ole Hansen, commodities analyst with Saxo Bank.

As for economic developments, Richmond Fed...

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