Gold and silver prices have started the month of August on a downward trend, as the recent appreciation of the U.S. dollar has put pressure on precious metals.
Price Action
- Gold futures expiring in December GC00, -0.89% GCZ23, -0.89% declined by $17.80, or 0.9%, to $1,991.40 per ounce on Comex.
- September silver futures SI00, -1.55% SIU23, -1.55% fell by 39 cents, or 1.6%, to $24.58 per ounce.
- Palladium futures for September PA00, -1.38% PAU23, -1.38% declined by $9.10, or 0.7%, to $1,266 per ounce, while platinum futures for October PLV23, -1.66% fell by $10, or 1%, to $948 per ounce.
- Copper futures HGU23, -0.70% fell by 3 cents, or 0.8%, to $3.97 per pound.
Market Drivers
In July, gold prices experienced a rebound after two months of losses, marking their biggest gain since March, according to Dow Jones Market Data. However, the recent strength of the U.S. dollar has hindered further gains in the past week.
According to Manoj Ladwa, director at ARJ Capital, “The US dollar is pushing higher again this week which is weighing heavily on gold prices currently,” he said in an emailed commentary.
The ICE U.S. Dollar Index DXY, which measures the dollar’s strength against a basket of other currencies, rose by 0.4% to 102.22 on Tuesday.
Ladwa also noted that despite the market’s belief that there won’t be any further rate hikes by the Federal Reserve this year, the dollar’s strength is linked to the resilience of the U.S. economy, as indicated by recent data.
Throughout 2023, U.S. economic strength has been a major theme in global markets. The latest data on GDP revealed that the economy grew by 2.4% during the second quarter, surpassing expectations.
Furthermore, earnings for the largest U.S. companies have been better than anticipated. Data from Refinitiv shows that almost 80% of S&P 500 index companies that have reported their earnings for the quarter have exceeded expectations, which is higher than the historical average.
Looking ahead, traders are eagerly awaiting the release of the next U.S. monthly jobs report from the Department of Labor, scheduled for Friday. Economists are expecting the data to show the creation of 200,000 new jobs in June.
