Gold pares losses, but still ends at 1-year low, in correction territory

Gold prices erased much of their earlier losses on Thursday, but still finished at a one-year low, as President Donald Trump voiced his displeasure with Federal Reserve rate increases, prompting a decline in the benchmark dollar index.

August gold GCQ8, -0.46% declined by $3.90, or 0.3%, to settle at $1,224 an ounce, posting the lowest finish for a most-active contract since July 2017. The settlement marked gold’s entry into correction territory—down more than 10% from its peak on Jan. 15 at $1,362.90.

A popular fund used to bet on gold’s moves, SPDR Gold Shares GLD, -0.40% was down 0.2%, trading around 1.3% lower for the week. Week to date, gold futures were down about 1.8%.

Gold futures had traded as low as $1,210.70 during Thursday’s session. The U.S. dollar has generated the strongest headwind for commodities priced in the currency, particularly gold.

The ICE U.S. Dollar Index DXY, +0.04% however, turned down by 0.1% Thursday to 94.96, after touching a high of 96.65, as Trump told CNBC that he isn’t “thrilled” that the Fed is hiking interest rates. The dollar index was still up about 0.2% for the week.

“At the moment it really is all about the U.S. dollar,” said Michael Armbruster, managing partner at Altavest.

“Gold had a chance to bounce at $1,240, but that level has failed: and the next level of chart support stands at around $1,180, he said. “My advice for gold bulls would be to stay on the sidelines and wait and see how gold behaves around the $1,180 level.”

Overall, the dollar has enjoyed a rebound as investors have turned to the U.S. as a source of safety during escalating trade spats between the U.S. and its major partners across the globe.

Moreover, signs that the Federal Reserve will continue to raise benchmark interest rates this year as it endeavors to normalize crisis-era monetary policy has somewhat bolstered the case for bullish dollar bets and helped propel key interest rates higher. The 10-year benchmark Treasury note yieldTMUBMUSD10Y, -0.96% was at 2.845%, compared with 2.831% last Friday. Rising rates can undercut appetite for commodities that don’t offer a yield like bullion.

Independent market analyst Stephen Todd, in a research note, said gold “can’t get out of its own way.” He has maintained a bearish outlook on the metal for more than a month.

Other metals faltered, with September silver SIU8, -1.53% tumbling by 17.2 cents, or 1.1%, to $15.402 an ounce, marking its lowest close since late 2016.

The iShares Silver Trust SLV, -1.37% was down 0.6% Thursday, looking at a loss of 2.3% for the week.

On the economic front, initial jobless claims, a tracker of sorts for layoffs in the U.S., sank for the period ended July 14 to the lowest level since the end of 1969. New claims dropped by 8,000 to 207,000 in the seven days ended July 14. Separately, a manufacturing report from Philadelphia Federal Reserve for July continued to show signs of strength and the June leading economic index rose 0.5% after no gain in May.

Elsewhere on Comex, September copperHGU8, -2.16% lost 2.3% to nearly $2.696 a pound, for its lowest finish in about a year. October platinum PLV8, -1.06% fell by 1.4% to $806.30 an ounce, while September palladium PAU8, -3.95% lost about 4% to $866.20 an ounce.

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