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.

Elsewhere in metal trading, silver shed almost 3% in the previous week, and September delivery for the white metal nudged lower by 0.78% to $ 683.38 per kg in 610 lots.

Palladium, which reached a near nine-month peak on Friday, also shed 0.3% at $678.20. It hit its fifth weekly increase the previous week after rallying 5% for the week.

Platinum retreated 0.6% at $1,070.99 per ounce.

Central Banks Meeting

Meanwhile, Shu said that the Bank of Japan and the Federal Reserve will possibly make some positive comment on the economic performance, along with other central banks, to alleviate the pessimistic emotions of the global financial market.

This week, central banks from Washington to Tokyo are in the limelight, although policymakers are likely to be guarded as they await the Brexit shock to drop completely.

MKS Group trader Sam Laughlin wrote in a note: “We see tentative trade this week within the precious complex with both the BOJ and Fed meeting,” and added, “Price action will likely be skewed to the downside and we expect to test the post-Brexit low around $1,305 and below this $1,300 should global equities continue their upward trajectory.”

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