Metal Prices Mixed as Dollar Flirts With Session Highs

Aug 09, 2018

Metal prices traded mixed Thursday as dollar strength and lingering trade-war concerns kept a lid on gains.

Gold futures for August delivery on the Comex division of the New York Mercantile Exchange fell by $0.30, or 0.02%, to $1,220.700 a troy ounce, from an intraday a high of $1,225.10.

Gold struggled to hold onto gains as the dollar traded near session highs shrugging off data showing wholesale inflation undershot estimates in July.

The U.S. dollar index, which measures the greenback against a trade-weighted basket of six major currencies, rose by 0.36% to 95.29, just shy of its intraday high of 95.35.

Lingering trade-war concerns, meanwhile, did little to boost demand for gold, as investors have seemingly opted for other safe havens such as the yen amid concerns Federal Reserve rate hikes would hold back gold prices.

More than 90% of traders continue to expect the Federal Reserve to hike rates next month, while more than 60% of trades see a fourth rate hike at the Fed's December meeting, according to 's Fed rate monitor tool.

In a rising interest rate environment, investor appetite for gold weakens as the opportunity cost of holding the precious metal increases relative to other interest-bearing assets such as bonds.

Analysts at BBVA (MC:BBVA) warned last week that there was little chance that the trade war between China and the U.S. would abate any time soon.

"As it stands, the state of negotiations between the U.S. and China are uncertain, and there is little indication that the conflict will be resolved quickly," BBVA said in a notes to clients last week.

In the wider metals markets, investor fears about a possible slowdown in metal demand from China from its trade war with the U.S. continued to weigh on sentiment.

Copper prices rose 0.47% to $2.76, while zinc prices fell 0.11% at 2,606.75.

Aluminium prices fell 1.76% to 2,074.50, while Nickel Futures fell 1.14% to 13,870.00.

Silver futures rose 0.12% to $15.45 a troy ounce, while Platinum futures gained 0.37% to $832.60.