Gold futures finished Tuesday with a loss as gains in the U.S. stock market and strength in the dollar helped to dull the appeal of the haven metal, at least in the short term.
February gold on Comex GCG9, -0.35% fell by $4, or 0.3%, to settle at $1,285.90 an ounce, giving back all but a dime of its gain from a day earlier. March silver SIH9, -0.31% meanwhile, followed its sister metal lower to lose 4.3 cents, or 0.3%, to $15.713 an ounce.
There was “an inevitable gold pullback today as the dollar improved, with a stock rebound and new stock buyers,” said George Gero, a commodities-focused managing director and financial adviser with RBC Wealth Management. Gold also pulled back amid some disappointment that the February contract didn’t clear the closely watched $1,300 area as interest switches to the April contract GCJ9, -0.36% he added.
The Dow Jones Industrial Average DJIA, +1.09% climbed Tuesday as gold futures settled, with bullish investors hoping for a third straight session of wins backed by optimism over trade talks.
Additionally, one measure of the buck, the ICE U.S. Dollar Index DXY, -0.02% was up 0.3% at 95.917, cooling Tuesday demand for the metals complex. Softness in the U.S. dollar had offered a runway for gold to rise late in 2018. Commodities priced in dollars often trade inversely with the dollar, as moves in the U.S. unit can influence the attractiveness of those commodities to holders of other currencies.
Some strategists maintained a bullish outlook for bullion and other precious metals on the back of expectations for continued volatility for so-called risk assets.
“While investment demand has increased already as a result of the recent equity market jitters, we believe it will be even stronger once the signs of a recession strengthen,” said Carsten Menke, commodities research analyst at Julius Baer, in a note. “Returning safe-haven demand should soften gold’s tight relationship with the U.S. dollar, making it less dependent on U.S. monetary policy and putting the recovery on a more solid footing.”
It’s this switch to “commodity mode” for gold investors from “currency mode,” according to Menke, that prompts Julius Baer analysts to bump up their outlook for the metal. They expect to see gold at around $1,300 in three months and up to $1,350 a year from now.
In other metals trading, March copper HGH9, +0.77% added 0.7% to $2.656 a pound. April platinum PLJ9, +0.43% lost 0.3% to $821.80 an ounce.
Palladium extended its run to fresh all-time highs. March palladium PAH9, +1.19% added 1.7% to $1,261.40 an ounce — another record settlement on Comex.
