Metals Stocks: Gold gets no traction from haven demand, pinned near 2018 lows

Gold futures twisted in mixed action before dropping early Tuesday as potential trade war concerns touched nearly all financial markets.

The yellow metal remained within a whisker of the lowest levels of 2018, plumbed last week when gold shed almost 2% for the week as it bucked what is typically a haven role when markets are roiled.

August gold GCQ8, -0.42%  fell $5, or 0.4%, to $1,275.40 an ounce and has ranged between $1,274.40 and $1,286.80 so far Tuesday. July silver SIN8, -1.06% shed 15 cents, or 0.9%, at $16.29 an ounce, after registering a 1.6% weekly decline on Friday and dropping Monday.

Among exchange-traded funds, the SPDR Gold Trust GLD, -0.19%  fell 0.2% and the iShares Silver Trust SLV, -0.58%  lost 0.7%. The VanEck Vectors Gold Miners ETF GDX, +0.18%  shed 1%.

“As the trade dispute between the U.S. and China is threatening to escalate, sentiment among market participants is becoming noticeably gloomier, stock markets are falling, cyclical commodities such as base metals are under pressure. Only gold appears unbothered by all of this,” said Carsten Fritsch, commodities analyst at Commerzbank.

Trade developments sent stocks sharply lower, though boosted the dollar, which does tend to move inversely to gold.

After Beijing’s retaliation against U.S. planned tariffs on $50 billion worth of Chinese imports, Trump asked U.S. trade representative Robert Lighthizer late Monday to identify $200 billion more in Chinese products that could be subject to tariffs of 10%. The U.S. president also threatened to find $200 billion more worth of goods if China tried to retaliate against those additional tariffs.

A spokesperson from China’s Ministry of Commerce said China will have no choice but to take comprehensive measures in response to the U.S.’s trade moves, the state-run Xinhua News Agency reported.

The ICE U.S. Dollar Index DXY, +0.54% a measure of the dollar against a half-dozen major currencies, was up 0.5% at 95.22, holding near 2018 highs.

“We find it incomprehensible that gold should not be in demand in the current market environment, characterized as it is by high levels of uncertainty, and is trading instead close to its lowest level since late 2017,” Fritsch said. “And as if this were not enough, ETF investors actually jettisoned some of their holdings [Monday]. The gold ETFs tracked by Bloomberg registered outflows of 4.5 tons. It may be that investors are selling gold just now to offset losses in other asset classes.”

Beyond trade tensions, investors are awaiting a release of data on housing starts for May due at 8:30 a.m. Eastern Time, alongside an update on building permits for the same month.

In Comex futures trading, July copper HGN8, -2.00%   fell 1.4% to $3.0635 a pound. If these losses hold, the contract will be down nearly 2.6% so far in this young week. On the London Metal Exchange, copper at one point hit a near three-week low at $6,838.50 a metric ton before improving.

July platinum PLN8, -2.10%  edged down by 0.4% to $880.80 an ounce, while September palladium PAU8, -1.29%  changed hands at $976.30 an ounce, down 0.7%.

Read: Copper, industrial metals slide as U.S.-China trade row heats up

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