Gold Falls From Record as U.S., Europe Stocks Rise, Dollar Gains
(Bloomberg) -- Gold slipped from a record as U.S. stocks rose on positive economic data and the dollar climbed.
For gold, “we have definitely seen a loss of momentum over the past several sessions where only modest, even marginal new highs are being made, which has likely driven shorter-term players to take some profit and trade it, rather than simply holding long positions,” said Tai Wong, head of metals derivatives trading at BMO Capital Markets. “It suggests a deeper, albeit still modest, correction is possible.”
Spot gold fell 0.2% to $1,972.74 an ounce at 1:42 p.m. in New York after reaching an all-time high of $1,988.40. Silver declined 0.5% to $24.27 an ounce after surging 34% in July. Gold for December delivery settled little changed at $1,986.30 on the Comex.
While the rally appeared to pause, analysts who say gold is overvalued aren’t expecting a substantial decline. A correction probably will be measured, thanks to the weak dollar and chronic turmoil in the global economy, BNP Paribas SA said.
In July, gold surged 11%, the most since 2012, as investors weighed a weaker dollar and record-low U.S. real yields. Strategists are now considering alternatives to government debt, such as cash, credit, dividend shares and gold. RBC Capital Markets said that gold looks like a “freight train” due to haven demand.
The coronavirus pandemic prompted unprecedented amounts of stimulus to shore up economies, including lower rates, which are a boon for non-interest-yielding gold. Simmering geopolitical tensions are boosting demand. U.S. Secretary of State Michael Pompeo said the Trump administration will announce measures shortly against “a broad array” of Chinese-owned software deemed to pose national-security risks.
The economic data on Monday drove copper and industrial metals higher, erasing earlier losses.
Copper for three-month delivery on the London Metal Exchange rose 1.2% to $6,490 a metric ton.
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