MW: Gold dips, extending tough November performance even as dollar wavers
Gold futures slipped Thursday, extending recent weakness after notching the ugliest monthly performance in over three years when investors shunned haven assets for riskier stocks and oil.
Gold’s dip was limited, however, as stocks, oil, bond yields and the dollar bounced around after early-week climbs. But most analysts see little change to a fundamental picture that underpins dollar and interest rate expectations, which are among the most influential factors for metals.
February gold GCG7, -0.32% slipped 90 cents, or less than 0.1%, to $1,173.20 an ounce. With Wednesday’s close, the lead-month gold contract shaved some 8% from its price in November, the worst one-month percentage loss since June 2013, according to data from Dow Jones.
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Against the rising dollar/rising yields backdrop, “gold [exchange-traded funds] saw outflows yesterday for the 14th consecutive day of trading,” said Carsten Fritsch and team at Commerzbank, in a note. “ETF holdings in November [experienced] their highest monthly outflow since June 2013 and the fifth-highest of all time.”
The ICE U.S. dollar index DXY, -0.37% which measures the greenback against a half-dozen rivals, fell 0.3% to 101.20. The generally strong dollar gave up some ground against the yen after striking a fresh nine-month high.
And U.S. stocks were set to kick off December struggling for direction, failing to get an extended oil boost after energy stocks led the way higher in the previous session following OPEC’s announced production cut.
The dollar gauge has recently been on a tear that has pushed it to multiyear highs amid expectations the Federal Reserve will raise interest rates at its meeting on Dec. 13-14 and that it will continue dialing up rates next year if spending plans by the incoming Donald Trump administration result in inflationary pressure on the U.S. economy.
A strong buck can be a drag to commodities priced in the dollar, including gold and oil, making them more expensive to buyers using other currencies. What’s more, the prospect of higher interest rates can be a headwind to a rise in precious metals because they don’t offer interest.
Gold remained modestly lower after a U.S. data release showed the number of Americans applying for unemployment benefits jumped in the most recent week but stayed close to multi-decade lows. The report did little to shake economists from a generally upbeat view for Friday’s nonfarm payrolls report, nor from expectations for that mid-month rate hike.
See: MarketWatch’s economic calendar
Uncertainty around Chinese demand for the precious metal was also a potential factor in Thursday dealings. The Financial Times reported that according to traders and bankers, Chinese authorities have taken steps to curb gold imports in another attempt by Beijing to stem capital outflows. The yuan currency had dropped to its lowest against the dollar in eight years
Meanwhile, March silver SIH7, -0.07% rebounded mildly from a sharp drop on Wednesday, last trading up 2 cents, or 0.1%, to $16.51 an ounce. The metal lost 7.6% in November, its biggest monthly drop since August. Silver recently receded into bear-market territory, which is typically defined as a 20% drop from a recent peak.
The exchange-traded fund iShares Silver Trust SLV, -0.76% shed 0.5%, while the SPDR Gold Trust GLD, -0.39% lost 0.2%. The VanEck Vectors Gold Miners ETF GDX, -0.67% eased 0.5%.
