By Victor Reklaitis and Carla Mozee, MarketWatch
NEW YORK (MarketWatch) — Gold futures pulled back on Tuesday, taking a break after a four-day winning streak.
Gold for December delivery GCZ3 -0.58% was lower by $4, or 0.3%, at $1,330.20 an ounce in electronic trade.
Gold prices on Monday climbed $22, or 1.7%, on the New York Mercantile Exchange, extending their winning streak to four sessions in the wake of better-than-expected economic data from China. China is expected this year to overtake India as the world’s largest gold consumer, according to the World Gold Council.
Gold on Tuesday had to fight a rise in the dollar DXY +0.39% against major rivals, including the euro and the Japanese yen. A report that Japan is considering a corporate sales-tax cut boosted Japanese equities but zapped the yen. Dollar-denominated commodities such as gold tend to come under pressure when the dollar strengthens, as it makes them more expensive to holders of other currencies.
On Tuesday, investors were taking in a mixed U.S. retail-sales report for July. The headline number slightly missed expectations, but details of the July report were stronger.
Improvement in the economy is what policy makers at the Federal Reserve are looking for as they determine when to start reducing asset purchases aimed at encouraging growth. A tapering of assets is considered helpful for the dollar’s value, but a negative for gold.
“With the backdrop of very low equity volatility and the S&P 500 SPX -0.01% up 19% on the year, compared to a 21% decline in gold, we expect the performance differential between gold and the S&P 500 to narrow rather than widen as the market increasingly prices in the reduction of U.S. Federal Reserve accommodation,” ETF Securities director of U.S. Research Mike McGlone wrote in a report Monday.
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Silver for September delivery SIU3 -0.04% rose by 19 cents, or 0.9%, to $21.53 an ounce. Silver prices on Monday rallied 4.6% to above $21 an ounce for the first time since June 19, according to FactSet.
Silver, along with more industrial-sensitive precious metals, saw price gains last week, benefiting from rising sentiment on “improving global economic prospects and strong physical demand,” McGlone said.
The most recent reports from China include increases in both imports and exports in July, and a 9.7% jump in industrial production from the year-earlier period.
Despite some upbeat reports, “we view the latest data as being an upward blip in what we think remains a deceleration in China’s growth trajectory,” said INTL FCStone metals analyst Edward Meir in commentary on base metals Monday.
“Having said that, base-metal prices will likely remain resilient at least through August, and it may not be until mid-September when markets turn sloppier in the aftermath of the Fed’s tapering program and perhaps the resumption of weaker numbers coming out of China,” said Meir.
Among base metals, copper for September delivery HGU3 +0.09% was up 1 cent, or 0.4%, at $3.32 a pound.
Futures for palladium and platinum, precious metals with industrial uses, were mixed. September palladium PAU3 +0.37% fell $2.60, or 0.4%, to $740.20 an ounce, while October platinum PLV3 +0.29% gained $7.20, or 0.5%, to $1,505.90 an ounce.
Victor Reklaitis is a New York-based markets writer for MarketWatch. Follow him on Twitter @VicRek.
Carla Mozee is a reporter for MarketWatch, based in Los Angeles. Follow her on Twitter @MWMozee.
