Gold futures ended lower on Tuesday, after touching their highest intraday price in five months, as investors digested the latest U.S. economic data which included a rise in October retail sales despite high inflation, and a monthly surge in industrial output.
“Investment flows are what drive gold prices, and after gold smashed through downtrend resistance as well as this summer’s highs on last week’s inflation shock data, it’s no surprise to see some of the hot money closing out their gains,” Adrian Ash, director of research at BullionVault, told MarketWatch.
The size of gold exchange-traded fund holdings and Comex speculation rose last week back to the highest level since June, he said, but all of that growth came from derivatives contracts, not from physical bullion.
Gold-backed ETFs actually ended last week at their “smallest size since June 2020,” said Ash. In contrast, bullish betting on Comex futures and options was the largest since the start of this year among money managers. he said.
” Those leveraged bets on the gold are naturally more short-term and fickle than portfolio allocations,” and so Tuesday’s strong U.S. economic data, including a rise in October retail sales, prompted some profit taking, he said.
fell $12.50, or 0.7%, to settle at $1,854.10 an ounce, after touching a high of $1,879.50, the highest intraday level for a most-active contract since June 14, FactSet data show.
Prices fell 0.1% on Monday, ending the longest string of gains for a most-active contract, seven straight days, since a nine-day rise that ended on July 29, 2020, according to Dow Jones Market Data.
Silver for December delivery
shed 16 cents, or 0.6%, at $24.944 an ounce.
U.S. economic data Tuesday was upbeat, easing some investment demand in the precious metals.
U.S. retail sales jumped by 1.7% in October, the government said Tuesday — the biggest gain since March, with as much as half the increase tied to higher prices. Economists polled by The Wall Street Journal forecast a 1.5% increase.
October industrial production also climbed by 1.6%, the Federal Reserve reported Tuesday. That was above expectations for a 0.8% gain, according to a survey by The Wall Street Journal.
For now, it’s a “wait and watch” situation for gold, said Chintan Karnani, director of research at Insignia Consultants, adding that Wednesday’s gold settlement will likely set the trend for the rest of November.
“Short-term gold investors and physical gold buyers (in Asia) will buy only if they are convinced that gold price has the juice to float over $1,900,” he told MarketWatch. If not, then prices may test the $1,825.30 and $1,793.30 levels, he said.
The Comex December gold contract expires in late December, FactSet data show. “Position squaring and rebuilding has now started for February futures,” said Karnani.
The decline for gold came amid a pop higher in the U.S. dollar, as measured by the ICE U.S. Dollar Index
which was up 0.4% on Tuesday, hanging near its highest level in about 16 months. A firmer dollar can make assets priced in the currency comparatively more expensive to overseas buyers.
“Sharp gains in the U.S. dollar index is preventing gold prices from breaking past $1,900,” said Karnani.
Meanwhile, December copper
shed 1.1% to $4.352 a pound. January platinum
also fell by 2% to $1,074.50 an ounce, but December palladium
settled at $2,167.60 an ounce, up 0.5%.