Gold ends higher, but logs a fourth straight monthly loss

Gold unwound earlier losses to settle higher Tuesday, even as the U.S. dollar tilted higher a day ahead of Federal Open Market Committee’s decision on monetary policy.

December gold GCZ8, -0.12% edged up by $2.10, or 0.2%, to settle at $1,233.60 an ounce. The finish higher marked the first gain for the yellow metal in four sessions, but the December futures contract ended roughly 2.6% lower for the month, for a fourth straight monthly loss. Based on the most-active contracts, futures prices fell by 1.7%, according to FactSet data.

Gold has mostly been swayed by a stronger dollar, but even as the buck’s ascent ran out of steam in July, the metal has struggled to find catalysts to lift it higher. The ICE U.S. Dollar Index DXY, +0.05% a measure of the dollar against six rival currencies, was up 0.2% at 94.52 in Tuesday trade. The greenback has lost about 0.1% month to date.

Meanwhile, September silver SIU8, -0.48% settled up 0.1% at $15.559 an ounce, ending about 3.9% lower for the month.

Among the popular exchange-traded funds, the SPDR Gold Shares GLD, -0.12% added 0.2%, while the iShares Silver Trust SLV, +0.21% edged 0.3% higher. Both were set to end lower for the month of July.

Expectations for coming interest-rate increases has weighed on bullion because investors in the asset see rising government bonds, viewed as a risk-free asset, competing with the haven status of gold, which doesn’t offer a yield. The 10-year Treasury note TMUBMUSD10Y, +0.66% was at 2.957%; moreover, the 2-year Treasury was yielding TMUBMUSD02Y, -0.30% at 2.674%, still hovering around its highest level since 2008. Richer yields for government debt can make gold less appealing, by comparison.

The Fed is expected to conclude its policy meeting on Wednesday. While it isn’t expected to raise interest rates, policy makers led by Chairman Jerome Powell are likely to affirm their intention to raise rates at least twice more before the end of 2018.

It has certainly been another painfully bearish trading month for gold, thanks mostly to a broadly stronger dollar and heightened U.S. rate increase expectations,” wrote Lukman Otunuga, research analyst at FXTM, in a Tuesday research note.

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Gold ends higher, but logs a fourth straight monthly loss
By Myra P. Saefong and Mark DeCambre
Published: July 31, 2018 2:23 p.m. ET

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Gold futures notch first climb in four sessions

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Gold unwound earlier losses to settle higher Tuesday, even as the U.S. dollar tilted higher a day ahead of Federal Open Market Committee’s decision on monetary policy.

December gold GCZ8, -0.11% edged up by $2.10, or 0.2%, to settle at $1,233.60 an ounce. The finish higher marked the first gain for the yellow metal in four sessions, but the December futures contract ended roughly 2.6% lower for the month, for a fourth straight monthly loss. Based on the most-active contracts, futures prices fell by 1.7%, according to FactSet data.

Read: Here’s what may be eroding gold’s traditional haven status

Also read: Gold—even at its lowest levels in 2018—is behaving just as prescribed

Gold has mostly been swayed by a stronger dollar, but even as the buck’s ascent ran out of steam in July, the metal has struggled to find catalysts to lift it higher. The ICE U.S. Dollar Index DXY, +0.04% a measure of the dollar against six rival currencies, was up 0.2% at 94.52 in Tuesday trade. The greenback has lost about 0.1% month to date.

Meanwhile, September silver SIU8, -0.48% settled up 0.1% at $15.559 an ounce, ending about 3.9% lower for the month.

Among the popular exchange-traded funds, the SPDR Gold Shares GLD, -0.12% added 0.2%, while the iShares Silver Trust SLV, +0.21% edged 0.3% higher. Both were set to end lower for the month of July.

Expectations for coming interest-rate increases has weighed on bullion because investors in the asset see rising government bonds, viewed as a risk-free asset, competing with the haven status of gold, which doesn’t offer a yield. The 10-year Treasury note TMUBMUSD10Y, +0.66% was at 2.957%; moreover, the 2-year Treasury was yielding TMUBMUSD02Y, -0.30% at 2.674%, still hovering around its highest level since 2008. Richer yields for government debt can make gold less appealing, by comparison.

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The Fed is expected to conclude its policy meeting on Wednesday. While it isn’t expected to raise interest rates, policy makers led by Chairman Jerome Powell are likely to affirm their intention to raise rates at least twice more before the end of 2018.

Read: Debate over Fed meeting centers on just two words

“It has certainly been another painfully bearish trading month for gold, thanks mostly to a broadly stronger dollar and heightened U.S. rate increase expectations,” wrote Lukman Otunuga, research analyst at FXTM, in a Tuesday research note.

“The yellow metal has clearly struggled to register any meaningful recovery in recent weeks, despite global trade tensions creating uncertainty and stimulating risk aversion,” he wrote.

U.S. stocks have wobbled in the face of unraveling of popular technology and internet-related bets that recently pushed the Nasdaq Composite Index COMP, +0.55% to its lowest close since July 5 and has weighed on the S&P 500 index SPX, +0.49% and the Dow Jones Industrial Average DJIA, +0.43% —an environment that should provide a runway for gold but hasn’t.

Meanwhile, investors reacted to the Bank of Japan’s decision to continue its easy-money policies, pulling the Japanese yen USDJPY, +0.02% sharply lower, contributing to strength in the U.S. dollar. Central-bank meetings of Bank of England on Thursday, where it is likely to lift rates for only the second time in a decade, were also being closely watched by markets.

“Gold fell as the yen rose against the U.S. dollar” after the Bank of Japan meeting, said Chintain Karnani, chief market analyst at Insignia Consultants. However, spot gold prices haven't fallen below $1,210, “which is a positive for gold.”

On the data front, June U.S. consumer spending rose by a solid 0.4%, while the core rate of inflation for the same month edged up by 0.1%. The July release on business conditions in the Chicago area showed a rise of 1.4 points to 65.5, the highest reading in six months and July consumer confidence climbed to 127.4—one of the highest readings in 18 years.

Other metals traded broadly higher for the session, with September copper HGU8, -2.47% up 1.4% at $2.832 a pound, but suffering a monthly decline of around 4.5%. October platinum PLV8, -1.87% rose 1.7% to $845.80 an ounce, ending down about 1.8% for the month, while September PAU8, -1.07% added 1% to $931.90 an ounce, for a monthly