Gold heads lower for a second session, but holds on to $1,300


Gold prices headed lower second day in a row Tuesday, as the U.S. dollar remained buoyant along with global equities, undercutting the appeal of the haven asset.

February gold

GCG8, -0.59%

 fell $7.20, or 0.5%, to $1,313.20 an ounce, but retained its grip on the psychologically significant level of $1,300, which it reclaimed in late December. The exchange-traded SPDR Gold Shares

GLD, -0.65%

 was down 0.6%.

“Although gold may witness further losses in the short term amid U.S. [interest] rate hike expectations, the yellow metal still remains bullish on the daily charts above $1,300,” said Lukman Otunuga, research analyst at FXTM, in a note Tuesday. “A weekly close above $1,320 could signal further upside with $1,333 acting as the next level of interest.”

The ICE U.S. Dollar Index

DXY, +0.25%

—a gauge of the greenback against a half-dozen rivals—was up 0.2%, underlining a modest, three-session uptrend for the currency. Because most commodities are priced in dollars, strength in the currency can create a headwind for assets like gold, detracting from its appeal among buyers using weaker currencies.

But the greenback has stumbled against rivals in recent months as hopes for a broad-based pickup in the global economy draws potential buyers away from the U.S. unit.

The recent downdraft for the buck also comes as a number of Federal Reserve members have stirred some doubt about the pace of interest-rate increases in 2018—with some pointing to it potentially exceeding the two or three that the market has priced in—due to concerns that recent fiscal stimulus measures could overheat the economy.

A modest slide for gold futures also comes as the S&P 500

SPX, +0.29%

 and the Nasdaq Composite Index

COMP, +0.14%

finished at a records Monday. Both were on track Tuesday to register a sixth straight gain.

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Futures prices for gold remain in the “middle of the last six-month’s trading range,” said analysts at the Sevens Report. “Until we see a break above $1,360 or below $1,240, we will remain neutral, and expect more choppy trade as Fed policy and economic data are digested by investors amid the huge gains in the stock market.”

Among other metals, palladium was standout, with futures prices poised to log another record settlement.

March palladium

PAH8, +0.30%

 was up $4.80, or 0.4%, to $1,100.50 an ounce. A settlement at this level would be the highest on record, based on FactSet data going back to 1984. It also logged a record finish last week.

Read: Palladium prices could top gold as record rally continues

Sister metal platinum saw its April contract Meanwhile, silver for March delivery

SIH8, -0.75%

 shed 0.1% to $975 an ounce. March silver

SIH8, -0.75%

 fell 0.9% to $16.99 an ounce and March copper

HGH8, -0.12%

 traded at $3.219 a pound, down 0.2%.

The iShares Silver Trust

SLV, -0.83%

declined by 1%.

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