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Gold futures finished lower on Tuesday to tally a seventh straight loss, the longest streak of daily declines in two years, as strength in the dollar and a lower economic growth forecast for China dulled demand for the precious metal.
“The key reason for gold price to fall is China,” said Chintan Karnani, chief market analyst at Insignia Consultants. “There is apprehension that a slower Chinese economy will translate into slower pace of gold demand.” China lowered its growth forecast to between 6% and 6.5% for this year.
However, “the fall in gold price is just a correction and not a bear trend,” Karnani said. A “bear trend in gold will be there if gold continues to fall after the release of [U.S.] nonfarm payrolls on Friday.”
April gold
GCJ9, +0.06%
fell $2.80, or 0.2%, to settle at $1,284.70 an ounce, with prices based on the most-active contract again finishing at the lowest since Jan. 24, according to FactSet data. A loss Tuesday for gold marked seven consecutive losses, the longest stretch of declines since the nine-session fall ended March 10, 2017, according to Dow Jones Market Data.
Read: Goldman urges caution on commodities, warns rally may fade
Gold prices had tapped session lows as the U.S. dollar strengthened a bit on the heels of data on new home sales and the ISM nonmanufacturing index. New home sales were at a seasonally adjusted annual rate of 621,000 in December, up from 599,000, while the ISM services survey jumped to 59.7% in February from 56.7%. The IHS Markit final U.S. services PMI was at 56 in February versus 56.2. See the economic calendar.
The dollar, as measured by the ICE U.S. Dollar
DXY, +0.21%
was up 0.2% at 96.839 as gold futures settled, making gold less appealing to investors using another currency.
Tuesday’s trading hasn’t seen “aggressive gold demand” as prices “have not shown signs of [a] bottom,” said Karnani. But the metal should see “good demand” from Wednesday and “for the rest of the month.”
“Chinese gold demand should also be good as a reduction [in the] trade war will be demand positive and not demand negative,” he said. Brexit and worries about the global economy and U.S.-China trade “are all long-term positive factors.”
For last week, bullion fell below the closely watched $1,300 line and lost about 2.5% on the week, the sharpest weekly fall since August. Broad risk-on sentiment, which boosted U.S. and global stocks, as well as strength in the U.S. dollar, worked to dull demand for the haven precious metal then and again to start this week.
Some weakness in the stock market, however, likely served to limit losses for the haven metal. U.S. stock indexes traded mostly lower Tuesday as investors continued to keep an eye on developments surrounding U.S.-China trade talks and China’s domestic economy.
Read: Why gold fell in February, but is still on a long-term track to reach $2,000 an ounce
May silver
SIK9, +0.23%
settled flat at $15.105 an ounce.
May copper
HGK9, +0.96%
finished at $2.934 a pound, up 0.8%. April platinum
PLJ9, -0.01%
lost 0.1% at $838 an ounce and June palladium
PAM9, -0.69%
shed 1.3% to $1,465.90 an ounce.
Among exchange-traded funds, gold-backed SPDR Gold Shares
GLD, +0.13%
lost 0.2%.
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