Gold prices end lower; silver rallies to highest finish since February

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Gold ended lower on Tuesday as a rise in U.S. retail sales contributed to a stronger U.S. dollar, pressuring prices for the precious metal.

The upbeat retail sales number, however, also lifted prices for silver, brightening the metal’s industrial demand prospects.

A stronger U.S. dollar against both the euro EURUSD, -0.4263% and British pound GBPUSD, -0.8628% “have dampened whatever bullish edge the [gold] markets had” on Tuesday, said Stephen Innes, managing partner at Vanguard Markets. “But Fed speak should continue to be more supportive for gold than not this week.”

August gold trading on Comex GCQ19, -0.30% fell $2.30, or 0.2%, to settle at $1,411.20 an ounce. On Monday, the yellow metal booked its highest most-active contract settlement since July 3, which saw a finish at $1,420.90—the highest since May 2013, FactSet data show.

September silver SIU19, +1.92% meanwhile, picked up 31.1 cents, or 2%, to $15.678 an ounce, the highest finish for a most-active contract since late February, FactSet data show.

“Silver behaved more like an industrial metal” on Tuesday, buoyed by hopes of a U.S.-China trade deal and better-than-expected U.S. retail sales numbers, said Chintan Karnani, chief market analyst at Insignia Consultants.

The move for gold, however, comes as the dollar strengthened, advancing 0.5%, as gauged by the ICE U.S. Dollar Index DXY, +0.46% A stronger dollar tens to be a negative for commodities priced in the unit, making them relatively more expensive to users of other currencies.

U.S. stock indexes, the Dow Jones Industrial Average DJIA, -0.08% and the S&P 500 SPX, -0.38% traded lower as gold futures settled, though traded not far from all-time highs after the main benchmarks finished at records on Monday.

Market participants say that the backdrop of a strengthening dollar and bullish moves in stocks was keeping gold prices in check but its uptrend remains in force.

Edward Moya, senior market analyst at Oanda, said “gold’s bullish outlook remains intact with short-term resistance resting at the $1,500 an ounce level,” in a Tuesday research note.

Federal Reserve Chairman Jerome Powell, in testimony before House and Senate lawmakers over two days last week, offered no pushback to market expectations for a rate move when policy makers meet July 30-31, analysts said. Lower rates are bullish for gold because it diminishes the competition between investing in the perceived safety of sovereign debt and bullion.

Among economic data Tuesday, U.S. retail sales data revealed a 0.4% rise in June, but the cost of imported goods in June fell by 0.9%, the steepest amount in six months, while industrial production last month was flat.

In other metals trading on Comex, prices for copper finished lower, with the September contract HGU19, -0.48% down 1.1 cents, or 0.4%, to $2.70 a pound. October platinum PLV19, +0.05% rose $1.70, or 0.2% to $846.90 an ounce, but September palladium PAU19, -3.03% dropped $46.60, or 3%, to $1,516.30 an ounce.

CNBC

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Ed Moya

Ed Moya

Senior Market Analyst at OANDA

With more than 20 years’ trading experience, Ed Moya is a market analyst with OANDA, producing up-to-the-minute fundamental analysis of geo-political events and monetary policies in the US, Europe, the Middle East and North Africa. Over the course of his career, he has worked with some of the world’s leading forex brokerages and research departments including Global Forex Trading, FX Solutions and Trading Advantage. Most recently he worked with TradeTheNews.com, where he provided market analysis on economic data and corporate news. Based in New York, Ed is a regular guest on several major financial television networks including BNN, CNBC, Fox Business, and Bloomberg. He is often quoted in leading print and online publications such as the Wall Street Journal and the Washington Post. He holds a BA in Economics from Rutgers University. Follow Ed on Twitter @edjmoya ‏

Ed Moya

Ed Moya

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