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Gold futures dipped below $1,800 an ounce, on track to settle below that key level for the first time in more than a week amid a broader pullback in commodity prices as the U.S. dollar advanced and traders grappled with a decidedly “risk off” mood in markets.
Price action
-
December gold futures
GCZ22,
-1.11%
fell by $21, or 1.2%, to $1,794.50 an ounce on Comex. Prices for the most-active contract were poised to settle at their lowest since Aug. 5, according to FactSet data. -
September silver
SIU22,
-2.00%
lost 49.8 cents, or 2.4%, to $20.20 per ounce. A settlement around this level would also be the lowest since Aug. 5. -
September palladium
PAU22,
-1.78%
declined by $48.90, or 2.2%, to $2,170.50 per ounce, while October platinum
PLV22,
-2.80%
shed $30.20, or 3.2%, to $929.20 per ounce. -
September copper
HGU22,
-1.46%
dropped 7.5 cents, or 2%, to $3.5935 per pound, on track for its biggest daily drop in a month.
What analysts are saying
With equity futures pulling back and Treasury yields falling, markets appeared to be shifting back into “risk off” mode Monday following a torrid four-week rally for the S&P 500
SPX,
Some analysts blamed the sour mood on weak economic data out of China, along with surprise interest-rate cuts from the country’s central bank.
See: China’s central bank cuts key policy rates
Meanwhile, Marc Chandler, chief market strategist at Bannockburn Global Forex, blamed the pullback in gold on the renewed strength in the U.S. dollar. The ICE U.S. Dollar Index, a gauge of the greenback’s strength against a basket of its main rivals, was up 0.6% on Monday after falling to its weakest level in a month late last week.
Gold’s move lower is just a “technical play with bond yields and the U.S. dollar index a price dictator for gold,” Chintan Karnani, director of research at Insignia Consultants, told MarketWatch.
Gold’s failure to trade over $1,800 an ounce has also led to profit taking, he said. Gold has to show signs of forming a lower price base at $1,800 to attract short-term investors,” he said.
Meanwhile, financial markets in India were closed Monday in celebration of Independence Day and Karnani said he believes gold’s price decline was partly due to that closure. When Indian markets reopen Tuesday, Indian gold demand should lift prices for the precious metal, he said.
In other markets news, bitcoin
BTCUSD,
also tumbled on Monday, trading just north of $24,000, after briefly breaking above $25,000 per coin for the first time since stocks and crypto bottomed in June.
Hear from Ray Dalio at the Best New Ideas in Money Festival on Sept. 21 and Sept. 22 in New York. The hedge-fund pioneer has strong views on where the economy is headed.
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