Gold Plunges on Firmer Equities

A stronger dollar, boosted by fading Brexit repercussions and upbeat US economic reports, are dragging commodities down, including gold. 

Precious metals including gold tumbled on Monday due to firmer, positive equities causing a weak trend overseas. The easing Brexit fallout impact on the US and optimistic US economic data are specifically what contributed to solid equities, thus a stronger dollar.

Spot gold plunged 0.4% at $1,316.16 a troy ounce. Bullion declined 0.7% last Friday, falling for a second week now. US gold toppled 0.5% to trade at $1,316.20 an ounce.

“We could see some falling of gold prices with markets thinking things are not as bad as expected post-Brexit and the good performance of key US economic indicators,” stated Jiang Shu, a chief analyst at Shandong Gold Group.

The decline was largely impelled by weak trends in global markets as upbeat equity markets and gains in the greenback dampened demand ahead of central bank meetings in the US and Japan set this week.

Based on data last Friday, hedge funds and money managers continue to flock on bullish silver bets in the week to July.

Crude Struggles Weekly Decline, Stockpiles on the Rise

Crude oil prices suffered a week-long decline due to persistent global oil glut.

After slightly climbing in Asian trade Friday morning, crude oil prices crashed once more as it extended sharp losses in the prior session. Investors reevaluated US data highlighting the petroleum oversupply, and Iraqi crude exports are progressively increasing.

Energy Aspects wrote in a note, “There is so much oil in storage that it will take months to truly feel the erosion of the overhang.”

Brent crude on the ICE Futures Exchange in London tumbled 0.3% to $46.07 a barrel, ending 2.1% lower in the preceding session. For this week, Brent had a decline of over 3%.

Meanwhile, US West Texas Intermediate (WTI) sank 0.6% to $44.50 a barrel, finishing lower 2.2% in the previous session. For this week, US oil prices fell 3.8%.

Earlier in the session, a weaker greenback lent support to prices which pushed crude into positive figures. The dollar index fell against its rival currencies on Friday, making dollar-branded commodities cheaper for other currency holders.

Gold Tumbles amid Revived Rate Hike Hopes

The precious metal fell to a three-week trough on Wednesday, extending overnight losses in North American trade as possibilities for the Federal Reserve to raise interest rates in latter 2016 were rekindled.  Contributing to the gold slump are also the positive US economic outlook and US stock futures gains brought by upbeat earnings results.

These renewed expectations and optimistic economic picture boosted the greenback and thus, dragged down gold prices.

Bill O’Neill, a broker at LOGIC Advisors, said that: “Gold had everything going for it. Now we’re in a period where things are a lot calmer… The perfect playing field that existed for gold is not in play for the short term.”

On the Comex division of the New York Mercantile Exchange (NYMEX), gold sank 1.2% to a low of $1,316.00 a troy ounce, a level last touched in June 30 during the period Britain voted to leave the European Union. It last traded at $1,318.70 by 12:38 GMT, down 1.02%.

Nonetheless, the yellow metal remained supported amid talks that European and Asian central banks will ramp up monetary stimulus in the coming months to counter the negative economic shock by the British referendum last June 23.

Expectations for monetary stimulus tend to boost gold as the bullion is considered a safe-haven asset and inflation hedge.

Bank of America Beats Analyst Estimates

Bank of America Corp. posted its quarterly earnings report on Monday with profit results topping analyst expectations.

The second largest U.S. bank by assets reported a high profit in each of its four main businesses as bond-trading revenue rallied more than estimates, amid quarterly earnings that were pulled back down by unrelenting low interest rates.

BAC shares, which had initially topped 19% this year, gained 3 cents to $13.69 in New York.

North Carolina-based lender The Charlotte announced a net income decline of 21% at $4.23 billion, or 36 cents a share for the second quarter, compared with $5.13 billion or 45 cents a share in the same period last year. The latest results comprised 6 cents a share in market-related charges.

Surveyed analysts from Reuters and Bloomberg had an average estimate of 33 cents per share.

Revenue tumbled 2.4% to $20.4 billion from $21.96 billion in 2015. Adjusted revenue was $20.6 billion, as analysts estimated $20.41 billion.

Meanwhile, shares climbed 0.4% pre-market. Global wealth-management profit added 7.9% to $722 million.