Gold retreated from its highest level in 11 months on Wednesday, as a stronger dollar and upbeat U.S. economic data set prices up to snap a three-session streak of gains.
Gold had logged gains in each of the last three sessions as North Korean jitters and the still unfolding record-setting impact from Hurricane Harvey drove investors into haven assets, but two upbeat economic reports Wednesday were seen as potentially giving the Federal Reserve cover to raise interest rates again this year.
Gold for December delivery
fell $4.40, or 0.3%, to $1,3164.50 an ounce. That’s a pullback from the settlement at $1,318.90 an ounce Tuesday, the highest since Sept. 29 of last year.
Gold has “decidedly broke out to the upside through resistance at $1,300 and [closed] comfortably above that level two days in a row,” said Tyler Richey, co-editor of the Sevens Report.
“The near-term trend is now higher, but the gold market has been finicky over the last two months, as now both a significant support and significant resistance level has been violated,” he said. “That leaves the broader technical outlook very cloudy.”
Data Wednesday morning revealed an upward revision to 3% from 2.6% for second-quarter GDP, the broadest measure of the economy. Separately, ADP’s snapshot of private-sector hiring showed that employers added a seasonally adjusted 237,000 jobs during the month, a big gain from the 178,000 jobs ADP reported in July. It’s often watched just ahead of the more closely followed monthly employment report due out Friday.
“Gold prices dropped $2 or $3 on the [economic] news, which falls into the camp of the U.S. monetary policy hawks, who want to see the Federal Reserve raise interest rates again this year,” said Jim Wyckoff, senior analyst at Kitco.
Financial markets have mixed feelings about the odds of another Fed rate hike—likely not until the December meeting, if at all. That’s because inflation has remained stubbornly low even as other aspects of the economy, including hiring, perk up. Higher interest rates undermine gold’s appeal since the bullion is nonyielding.
Gold’s advance this week came after North Korea fired a ballistic missile across northern Japan, in what Japanese Prime Minister Shinzo Abe called an “unprecedented, grave and serious threat that seriously damages peace and security in the region.” But worries subsided by midweek. In reaction, the ICE Dollar index
a gauge of the buck against a half-dozen currencies, was trading up 0.5% at 92.723 Wednesday.
The greenback’s closely followed index fell earlier this week to trade at its lowest levels since January 2015 as Hurricane Harvey’s destruction in Texas came to light. A weaker greenback tends to boost commodities tied to the currency such as gold, as it becomes cheaper to buy for other currency holders.
Meanwhile, December copper
slipped a cent, or 0.3%, to $3.094 a pound. It saw its highest finish since September 2014 this week and trades more than 20% higher year to date on bets for strong demand from China.
fell 2.1 cents, or 0.1%, to $17.495 an ounce. October platinum
fell $5.60, or 0.6%, at $997.90 an ounce, after earlier this week settling above $1,000 for the first time since March. December palladium
fell $10.25, or 1.1%, to $933.45 an ounce, but still trading close to levels not seen since 2001.