Gold stages modest rebound as U.S. dollar softens


Gold futures rebounded slightly Tuesday, a climb partly backed by a softening dollar that has provided short-term lift to the bullion that’s been trading near the year’s lows.

December gold

GCZ8, +0.02%

 settled up 30 cents, or 0.02%, at $1,218 an ounce, after the yellow metal finished lower in the previous session.

September silver

SIU8, +0.11%

meanwhile, added 7 cents, or 0.05%, to $15.355 an ounce, after booking a solid loss to start the week.

A popular metals exchange-traded fund, the SPDR Gold Trust

GLD, +0.19%

was up 0.1%, while the comparable silver ETF, the iShares Silver Trust

SLV, +0.28%

advanced by 0.7%.

The precious metal’s rebound coincides closely with a downturn for the U.S. dollar, as measured by the ICE U.S. Dollar Index

DXY, -0.16%

which was off 0.1% at 95.24. A weaker dollar can make purchasing dollar-pegged metals more attractive to buyers using other currencies.

The modest moves higher for commodities come even as assets perceived as risky were also climbing. Gold is typically considered a haven asset that moves inversely to equities. U.S. stocks gained in line with a global rally with the S&P 500 index

SPX, +0.34%

  flirting with record territory.

“I think we are in a period of seasonal weakness,” said George Milling-Stanley, head of gold investment strategy at State Street Global Advisors. “Demand in second quarter has been rather soft and I think that has been reflected in the price and I think that has continued into the third quarter,” he said.

Meanwhile, global trade friction has continued to be a persistent concern running in the background, intermittently knocking equity markets around and driving buying in bonds and the dollar. However, tariff conflicts between the U.S. and China have provided a more outsized boost to the dollar, weighing on the yellow metal, market participants said.

Read: Here’s what may be eroding gold’s traditional haven status

“I’m beginning to wonder if the bearish action in China is affecting the gold market. The Chinese have been big buyers of gold. The Shanghai index is down 24% from its recent highs,” wrote Stephen Todd, an independent market analyst in a research note.

The Shanghai Composite Index

SHCOMP, +2.74%

is down roughly 16% so far this year and about 21% from its peak in late January, according to FactSet data. Over the weekend, President Donald Trump tweeted that “tariffs are working big time” and earlier cited declining Chinese stocks as evidence of their impact.

“There’s a bigger appetite for risk than I would have thought in current circumstances,” said State Street’s Milling-Stanley.

Meanwhile, commodity investors shrugged off a reading of employment, with a June reading from the Labor Department showing there were 6.66 million job openings at the end of the month, up fractionally from May and the third highest in history. A report on consumer credit for June is set to be released at 3 p.m.

In other metals, September copper

HGU8, +0.73%

added 2 cents, or 0.7%, to $2.752 a pound. Because of its use as an industrial metal, copper has been particularly influenced by vacillating trade-war concerns.

October platinum

PLV8, +0.53%

 advanced 0.5% to $830.40 an ounce, while September palladium

PAU8, -0.23%

fell 0.1% to $902.90 an ounce.

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