Gold futures retreated Tuesday, unable to extend a sharp rally from a day earlier, when a tumble for stocks and fresh worries over global trade spats lured investors to the perceived safety of bullion.
Although European stocks were lower, U.S. futures showed that equities there would try to recover at least part of Monday’s tech-driven bloodletting, while a leading dollar index’s DXY, -0.02% less than 0.1% drop did not register much help for gold. The two typically move inversely.
June gold GCM8, -0.30% fell $4.30, or 0.3%, to $1,346.90 an ounce. Gold rose over 1% to start the week, a move that allowed the haven precious metal to build on what was a third quarterly gain in a row to start the year, although was notably the slimmest three-month rise—up just 0.7% for the June contract and up 1.4% on a continuing basis—in seven years.
Goods and services trade uncertainties are keeping a floor under the precious metals market. The Trump administration is expected this week to unveil a list of advanced-technology Chinese imports targeted for U.S. tariffs. That will follow Beijing’s announced tariffs on about 130 U.S. goods, including key agricultural exports, intensifying a dispute between the world’s two largest economies.
It’s this underlying safety theme, including against a backdrop of greater stock-market volatility, that is likely to keep gold above $1,300 this year, Citi analysts said in a note. They see a 30% chance that gold can even clear $1,400 in 2018.
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“A combination of a dovish U.S. rate hike on March 21 [when the Federal Reserve stuck with its projected number of rate hikes for the year], global trade tensions, lower bond yields and a stronger yen all help trigger a gold rush during the reporting week to March 27,” said Ole Hansen, head of commodity strategy at Saxo Bank, in a commentary, citing commitment of traders data. “Speculators bought…the most in a single week since June 2016.”
Despite these upbeat factors stacked in its favor, gold has struggled to break from a slim trading range of $1,310-$1,360 since the start of the year.
Meanwhile, May silver SIK8, -0.76% fell 13 cents, or 0.8%, to $16.535 an ounce after a 2% climb in the previous session. The contract lost about 5% for the first quarter.
Mixed trading characterized the ETF space in early action. The SPDR Gold Shares GLD, +1.17% rose 0.3%. The iShares Silver Trust SLV, +1.56% slipped 0.3%, while the VanEck Vectors Gold Miners ETF GDX, +1.14% bounced back with a 1.6% gain after the ETF was down nearly 6% for the first quarter.
Among other metals, May copper HGK8, +0.51% added 0.2% to $3.057 a pound. July platinum PLN8, -0.57% fell 0.3% to $934 an ounce. June palladium PAM8, +0.47% fell 0.8% to $935.50 an ounce.