Yellow metal sees fifth loss in six sessions
Gold futures fell Thursday, closing at a more-than-one-year low, as trade tensions between the U.S. and China resurfaced a day after the Federal Reserve affirmed its intention to lift rates further in 2018. Both factors have given the U.S. dollar more buoyancy in recent trade, weighing on commodities pegged to the currency. Rising trade animosities between Washington and Beijing were in focus on Wall Street, as the Trump administration threatened to more than double proposed duties on $200 billion of Chinese goods to 25%, up from an original 10%. That has weighed on global stock markets but has provided the U.S. dollar a lift, as global trade tensions have recently flared up. A measure of the dollar against a basket of six other currencies, the ICE U.S. Dollar Index DXY, +0.04% was up 0.5% at 95.095, with its week-to-date gain at 0.4%. The Bank of England’s interest-rate hike wasn’t enough to lift the British pound into positive territory versus the U.S. dollar on Thursday. The U.K. central bank upped its benchmark rate by 25 basis points to 0.75% in an unexpectedly unanimous vote. A stronger greenback makes assets priced in the U.S. unit more expensive to buy using other currencies. “Gold has no story going forward,” said Ira Epstein, managing director, at commodities broker Linn Group. Gold is now fighting a rising set of interest rates in America and it saw the Bank of England raise rates today and it’s going to have to deal with the fact that if Europe stabilizes rates there will start climbing,” he said. Rising yields of risk-free government bonds can dull the appeal of gold which doesn’t offer a yield. The Fed on Wednesday upgraded its assessment of the U.S. economy and hinted at another interest-rate hike as soon as September. The 10-year U.S. government bond yield TMUBMUSD10Y, -1.31% edged lower to 2.985%, after hitting a psychologically significant level at 3% and finishing late-Wednesday trade in New York at its highest yield since May 23 after the Fed’s policy update. “The markets got exactly what they had been expecting in terms of no rate increase this month and continued commitment to gradual normalization of rates,” said George Milling-Stanley, head of gold investment strategy at State Street Global Advisors. He believes “there is no reason to expect any significant impact on gold prices in either direction,” but “there is always the possibility of a small knee jerk bounce in gold now that the meeting is out of the way without any apparent increase in hawkishness on the committee.” In other metals trading, September silver SIU8, +0.26% lost 6.7 cents, or 0.4%, to $15.385 an ounce. September copper HGU8, +0.58% the base metal which has been the most vulnerable to concerns over trade clashes, fell a penny, or 0.4%, to $2.738 a pound. The industrial commodity has lost 2.3% so far this week. October platinum PLV8, +0.54% ended at $828.20 an ounce, up nearly 1.4%, while September PAU8, -1.08% added 0.4% to $915.50 an ounce.