Gold prices eked out a marginal gain on Monday after prices pared earlier declines following the release of a closely watched gauge of manufacturing activity, which had slid to its lowest level since the onset of the COVID-19 pandemic.
Price action
-
Gold for August delivery
GC00,
-0.03% GCQ23,
-0.03%
gained $1.40, or 0.7%, to settle at $1,930.80 an ounce on Comex. -
September silver
SI00,
-0.03% SIU23,
-0.03%
gained 8 cents, or 0.3%, to settle at $23.09 per ounce. -
September palladium
PAU23,
+2.12%
rose by $5, or 0.4%, to settle at $1,226 per ounce, while October platinum
PLV23,
+0.47%
gained $2.50, or 0.3%, to$915.70, -
Copper for September delivery
HGU23,
-0.11%
gained 3 cents, or 0.9%, to settle at $3.79 per pound.
Market drivers
“Gold has struggled in recent weeks against the backdrop of persistent stubborn inflation, resilient economic data, and, as a result, higher interest rate expectations. We’re seeing it bounce back a little over the last couple of sessions after briefly dipping below $1,900 but the trend is still very much against it,” said Craig Erlam, senior market analyst at OANDA.
Gold prices received a reprieve on Monday after a barometer of business conditions at American factories fell to the lowest level since 2020 when the U.S. was locked down during pandemic, underscoring broad weakness in the industrial side of the U.S. economy.
The Institute for Supply Management’s manufacturing survey dipped to 46% in June from 46.9% in the prior month. It was the lowest reading since May 2020.
See: Manufacturers contract for 8th month in a row, ISM finds, and are weakest since the pandemic lockdowns
But analysts expected the report likely only elicited a brief reprieve for gold prices, which have been trending lower since logging the second-highest close for a most-active futures contract ever on May 4. The most-active contract settled at $2,055.70 an ounce that day, Dow Jones Market data show.
Precious-metals market analysts have blamed the weakness in gold on expectations that the Federal Reserve could delivery two more interest-rate hikes later this year, which has helped to push up Treasury yields and the value of the U.S. dollar.
The highest settlement level on record for the yellow metal arrived on Aug. 6, 2020, when prices finished at $2,069.40 per ounce, according to Dow Jones Market Data. Analysts had thought gold might eclipse that high during its bull run that began last fall and peaked in May. Whether or not it will resume remains to be seen.
The ICE U.S. Dollar Index
DXY,
gained 0.2%, to 103.09, while the yield on the 10-year Treasury note
TMUBMUSD10Y,
gained 5.3 basis points to 3.863%.
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