Gold near fresh lows despite falling dollar, equities

Otmane El Rhazi from The Bullion Desk.

Gold was close to setting a new five-year low as a waning dollar and weakening equities failed to boost the complex.

Gold for August delivery on the Comex division of the New York Mercantile Exchange was last down $13.60 or 1.2 percent to $1,089.90 per ounce. Trade has ranged from $1,085.60 to $1,102.30.

Spot gold is currently trading at $1,091.20/1,092.0 per ounce with the session low at $1,087.40 – near Monday’s low of $1,085.0, which was the lowest price since April 2010.

On Tuesday, gold prices retrenched after a brutal selloff the day before, but are now pushing downward even with the dollar losing much of the ground made last week.

The dollar was last 0.3 percent stronger at 1.0908 against the euro, but yesterday the greenback dropped a full percentage point. Global equity markets are down across the board with Germany’s DAX and France’s CAC-40 last down 0.8 percent and 0.5 percent respectively.

Gold is used as a safe haven for investors by acting as a hedge for equity and currency price movement.

“The downswing on the precious metal markets is continuing, prices again nearing the lows they had hit at the beginning of the week,” Commerzbank said. “Thus gold is now weak despite a recently depreciating US dollar and falling equity markets.”

Gold outflows continued from ETF funds simultaneously. In funds tracked by FastMarkets, holdings have again set a new 2015 low at 1,573 tonnes.

In Asia, Chinese CB leading index month-over-month in June was up one percent, slightly below the previous reading of 1.1 percent. Japanese industrial activity month-over-month in May was in-line with estimates of a 0.5 percent decline.

As for other precious metals, Comex silver for September delivery fell 8 cents to $14.705 per ounce. Trade has ranged from $14.585 to $14.835.

Platinum for October settlement was down $17.90 to $966.40, while the most actively traded palladium contract was at $613.85, down $15.60.

(Editing by Tom Jennemann)

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