Dollar index heads for weekly gain of 1%, weighing on buck-priced commodities
Gold futures suffered a fifth consecutive loss on Thursday, with overall strength in the U.S. dollar prompting the metal to post its longest streak of declines since June 2017.
However, risk-off sentiment, on the back of a selloff in U.S. and European stocks, capped losses for haven gold.
Gold for April delivery GCJ9, -0.09% fell 20 cents to settle at $1,314.20 an ounce. It was down a fifth straight session, logging the longest losing streak for a most-active contract in roughly 20 months, according to FactSet data. Prices marked their lowest settlement in just over a week and trade down by 0.6% week to date.
March silver SIH9, -0.27% added 1.2 cents, or less than 0.1%, to $15.713 an ounce.
The dollar, after a weaker start to the year, found its footing this week, with the ICE U.S. Dollar DXY, +0.00% a measure of the currency against a basket of six major rivals, was up about 1% this week so far, turning positive for 2019. A stronger dollar can be a weight on commodities priced in the U.S. unit, making them more expensive to users of other currencies.
“The exchange rate development is presumably the only reason why gold is falling just now, as gold in euros is holding its own relatively well at around €1,150. We believe that gold should remain in good demand – after all, the political risks appear to be increasing again,” wrote analysts at Commerzbank, in a note.
They highlighted the potential for renewed tensions between Italy and the European Union after Brussels cut its economic forecasts for the country and the eurozone. Slower GDP growth will make it more difficult for Italy to hit its budget deficit target, potentially reigniting tensions with Brussels.
Looking ahead to next week, there’s potential for “incremental market turbulence and gold could potentially tee off that,” said Edward Meir, independent commodity consultant for INTL FCStone, in a note. “In particular, we have the February 15 [U.S.] government shutdown deadline to navigate and the U.S./Chinese trade talks that will also get underway by then.”
In other metals trade, March palladium PAH9, +0.21% was up 0.5% to settle at $1,358.10 an ounce, with prices again marking a record settlement.
April platinum PLJ9, +0.08% lost 2% to $797.30 an ounce and March copper HGH9, -0.30% fell 0.3% to $2.829 a pound.
Among exchange-traded funds, the SPDR Gold Shares GLD, +0.24% and iShares Silver SLV, +0.61% each lost 0.3%. The VanEck Vectors Gold Miners GDX, -0.86% traded down 0.9%.