Gold struggles for direction on risk-off sentiment, stronger dollar

U.S. benchmark stock indexes traded lower Tuesday on the back of heavy losses for technology-related shares.

Still, strength in the U.S. dollar set limits to any gains for gold. The dollar was gaining momentum, as measured by the ICE U.S. Dollar Index DXY, +0.41%, up 0.3% at 91.256. A stronger buck can undercut demand for assets priced in the currency.

“Precious metals market are clearly being undermined as a result of what appears to be a developing uptrend in the dollar index,” analysts at Zaner wrote in a Tuesday note.

June gold GCM21, -0.98% was off $1.70, or 0.1%, at $1,790.10 an ounce, following a 1.4% gain on Monday that helped the metal notch the highest settlement for a most-active contract since April 21, FactSet data show.

July silver SIN21, -2.58% added 2 cents, or nearly 0.1%, to trade $26.98, following a 4.2% gain that drove gold’s sister metal to its biggest single-day point and percentage gain and highest finish since February.

Moves for precious metals were taking place amid reports of military tensions between China and Taiwan, as well as Singapore’s tougher lockdown against the COVID pandemic.

Among the other metals traded on Comex, palladium was a standout, as prices based on the most-active contracts touching an intraday record above $3,000 an ounce and they were on track to notch another record high settlement.

June palladium PAM21, -0.55% rose 0.2% to $2,987 an ounce after trading as high as $3,019. The intraday high marked a fresh record and prices on Monday settled at an all-time high, according to Dow Jones Market Data.

With very strong U.S. vehicle sales reported Tuesday, “non-palladium demand expectations are ramped up,” said analysts at Zaner. Palladium is used in catalytic converters for gasoline-powered vehicles.

Meanwhile, July platinum PLN21, -0.50% tacked on 2.2% to $1,256.90 an ounce and July copper HGN21, -0.24% was little changed at $4.53 a pound.