'Vulnerable' Gold at Seven-Week Low as Dollar Recovers Losses

  • U.S. currency and stock gains erode bullion’s haven appeal
  • Prices may worsen if gold dips below key level: Commerzbank

Dollar Weakens Amid Positive and Negative Data Surprise

Gold fell the most since December as gains in the dollar and higher equity prices limited demand for haven assets.

The dollar rose against other G-10 currencies and U.S. stocks advanced for a second session, while the yield on the U.S. 10-year note touched the highest since May 16. Higher yields dampen the allure of non-interest bearing gold.

“Gold currently looks vulnerable,” UBS Group AG analyst Joni Teves said in a note. “Higher yields and market participants digesting a hawkish shift in tone among key central banks of late, while equities stay resilient around all-time highs,” are negative for the metal.

For a QuickTake on gold’s historic price performance, click here.

Gold for August delivery on the Comex fell 1.9 percent to settle at $1,219.20 an ounce at 1:39 p.m. in New York. The decline was the biggest since Dec. 15. Bullion touched $1,218.50 an ounce, the lowest since May 11.

The metal closed below $1,238.40 an ounce, its average over the previous 200 days -- a measure watched by some traders for price clues.

“Ongoing risk appetite” is weighing on gold, analysts including Carsten Fritsch, at Commerzbank AG said in a note. Should gold dip below the 200-day moving average “we would likely see technical follow-up selling.”

June and July are normally middling months for gold, with spot metal typically rising by less than 1 percent, compared with rising 3.9 percent on average in Januaries over the past 10 years, and falling about 1.5 percent in March between 2007 and 2016.

In other gold-market news, the Perth Mint reported falling sales in June with 19,259 ounces sold, down by more than a third from May. Meanwhile, Russia increased gold’s share in its international reserves in 2016 to 15 percent from 12 percent.

In other precious metals:

  • Silver for September delivery fell 3.2 percent, the biggest loss for a most-active contract since March 2.
  • Platinum fell on the New York Mercantile Exchange, while palladium rose.
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