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Gold gained slightly on Thursday as a popular gauge of the dollar’s strength declined, boosting the short-term allure of the buck-priced metal.
August gold inched up by 30 cents, or less than 0.1%, to $1,301.70 an ounce as the ICE U.S. Dollar Index fell 0.3% at 93.41, declining by 0.6% week to date.
“Despite the very tight trading ranges, we remain cautiously optimistic on gold and see it moving higher over the course of June, although not by substantial amounts,” said Edward Meir, an independent commodity consultant at INTL FCStone.
For now, “it seems to be a watch and wait game for a little while longer, as speculative money has clearly moved on to more exciting markets,” he said in a recent note.
Some analysts emphasized the inability of the dollar to move gold significantly of late.
“The yellow metal continues to trade in a very narrow range between $1,290 and $1,307 established in recent weeks and has surprisingly remained largely unfazed by the latest pullback in the U.S. dollar,” said Marios Hadjikyriacos, a strategist at brokerage XM.
Rising real interest rates impact the opportunity costs of holding gold because the metal provides no yield. It also entices investors to rotate into riskier assets like stocks, which were mixed Thursday. Higher rates may also boost the value of the dollar, which usually moves in the opposite direction of the gold price. June’s rate hike has largely been priced into dollar levels, traders say.
Across financial markets, trade tensions remained in focus as Group of Seven nations will hold talks in Canada on Friday and Saturday. The recent rebuke by G-7 finance ministers of the Trump administration’s trade tariffs could add some stress to the gathering, which could underpin the allure of the haven metal.
July silver meanwhile, added 1% to $16.855 an ounce, as its moves continue to outpace those for gold.
“While the dollar index has risen almost 7.7% from its February 16 low to its May 29 high, the buck-denominated grey precious metal has fallen just 3.6% during the same period. While silver does still tend to correlate positively with the euro-dollar and negatively with the dollar-yen, its correlation is quite weak with both pairs,” said Fawad Razaqzada, analyst with Forex.com. “The very long-term picture [for silver] is still bullish.”
Razaqzada, eyeing the charts, noted that silver futures had cleared resistance at $16.80 and said a move back below $16.20 would be a bearish development.
July copper traded at $3.285 a pound, up 0.7%. July platinum fell by 0.6% to $902.60 an ounce. September palladium shed 0.6% to $1,008.80 an ounce, after it marked its highest finish since late January on Wednesday.
Among exchange-traded funds, the SPDR Gold Shares was up nearly 0.1%, while the iShares Silver Trust jumped 1% and the VanEck Vectors Gold Miners ETF fell 0.7%.