Gold futures were headed lower Tuesday as investors turned to U.S. dollars with global stocks sinking amid concerns about lofty valuations for highflying, technology-related stocks which had led the rally in equities amid the COVID-19 pandemic.
Gold has come under pressure as “the dollar wrestles [to] break its downtrend and moves into correction mode,” wrote Craig Erlam, senior market analyst at Oanda, in a Tuesday research note.
The move for the precious metal also comes on the heels of sharp losses in the U.S. stock market, which can prompt some traders to sell gold to cover losses in other assets.
Still, with selling pressure “intensifying” in the U.S. stock market, that “could lift the safe-haven metals as the trading session progresses,” said Jim Wyckoff, senior analyst at Kitco.com, in a daily note. Gold and silver prices have moved up from their overnight lows, he said.
December gold GCZ20,
December silver SIZ20,
Metals traded on Comex didn’t post settlement prices on Monday due to the Labor Day holiday being observed in the U.S.
U.S. stocks declined Tuesday, with the tech-heavy Nasdaq Composite Index COMP,
The downturn for highflying stocks and a geopolitical concerns may also have been contributing to a rush to dollars, which was weighing on bullion. President Donald Trump on Monday said he intends to “end reliance on China once and for all, whether it’s decoupling or putting in massive tariffs like I’ve been doing already.”
Producing the stiffest headwinds for gold, arguably, was a 0.6% gain in the U.S. dollar index to 93.306, as measured by the ICE U.S. Dollar Index DXY,
A rising dollar can make commodities priced in the currency more expensive for overseas investors.
Still, continued U.S.-China tariffs escalate tension, and upcoming U.S. presidential elections and the pandemic, as well as “currency dislocation are adding to reasons for gold buyers to add on bigger dips” in prices, said George Gero, managing director at RBC Wealth Management, in a daily note.
He said he continues to expect silver to eventually climb to $ 30 an ounce and for gold to climb back to $ 2,000 “as more sellers rush to cash.”
In other Comex dealings, the most-active December copper contract HGZ20,
