Gold prices were headed sharply lower on Monday, skidding below a psychologically important level at $1,500 in the final trading day of the month and quarter, pressured by a firming dollar and some buoyancy in U.S. stocks and yields, drawing demand away from bullion.
Gold for December delivery GCZ19, -1.05% on Comex declined $16.80, or 1.1%, to $1,489.60 an ounce, after notching on Friday losing 0.6% last week. For the month, gold is on pace to decline 2.6% but has gained 5.3% thus far over the past three months.
December silver SIZ19, -2.39% lost 38 cents, or 2.1%, to trade at $17.285 an ounce, following a weekly decline of 1.1% on Friday. Silver futures are on track to lose 5.7% in September, but have gained 12.8% so far in the quarter.
The ICE U.S. Dollar Index DXY, +0.26%, which tracks the currency against a half dozen rivals, was around its highest level since roughly April of 2017, according to FactSet data. On top of that, U.S. stocks were showing slight gains and bond yields, which compete with gold for haven demand, also were trending higher. The 10-year Treasury note TMUBMUSD10Y, +1.13% yielded around as of 1.69% early Monday.
“Gold is heading south and $1,480 may be in trouble. This isn’t the first time that this level has been tested and you don’t have to be a technical analyst to see that a break of it could be damaging.” said Craig Erlam, senior market analyst at Oanda.
A bout of easing from central bankers, which has helped to drive investors to the safety of bullion also has helped strengthen the buck, undercutting gold’s recent gains.
A stronger dollar can make assets priced in the currency, like gold, less attractive to investors using other monetary units.
“A break of $1,480 will draw attention back to $1,450 but the correction could be deeper still,” warned Erlam,