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Gold futures headed higher on Monday, attempting to halt a three-session slide, as global markets suffer significant declines on the back of a downturn in China’s property market.
December gold
GCZ21,
GC00,
was trading $9/8-, or 0.6%, higher at $1,761.20 an ounce, after bullion last week booked a weekly decline of 2.3%, marking the second straight weekly decline.
The tilt higher for gold came as stock benchmarks, notably the Dow Jones Industrial Average
DJIA,
and the S&P 500 index
SPX,
saw sharp declines amid growing worries about the collapse of a Chinese property developer, Evergrande, saddled with some $300 billion in debt that could spillover into other parts of the global market. Hong Kong’s Hang Seng
HSI,
market declined over 3% in Asian trade Monday.
“It’s a big risk-off trading day in the historically sometime-turbulent month of September for the stock and financial markets,” said Jim Wyckoff, senior analyst at Kitco.com, in market commentary. Evergrande is “in big financial trouble and traders and investors are very worried about a contagion effect.”
The Evergrande crisis also comes as the U.S. Federal Reserve has its two-day monetary policy meeting beginning Tuesday and ending Wednesday with a statement and press conference from Fed Chairman Jerome Powell. “The marketplace is wondering if a big sell off in global stock and financial markets early this week would affect the Fed’s discussion on the timing of tapering its bond-buying program.”
Prices for bullion have been under pressure in recent sessions as a result of strong economic data out of the U.S., which has supported the belief that the Fed will taper its $120 billion in monthly purchases of Treasurys and mortgage-backed securities before the end of 2021, which would influence trade in precious metals.
Gold had “tried to rebound on Friday, jumping even above $1,765, but the strength of the greenback, combined with expectations of the Fed’s hawkish statement, have been a bearish catalyst,” wrote Carlo Alberto De Casa, market analyst at Kinesis Money, in a daily research note.
Meanwhile, December silver
SIZ21,
shed 2.7 cents, or 0.1%, to $22.31 an ounce, following a 6.5% weekly drop for gold’s sister metal on Friday.
December copper
HGZ21,
lost 2.3% to $4.15 a pound, while October platinum
PLV21,
fell 2.3% to $909.40 as ounce.
December palladium
PAZ21,
traded at $1,920 an ounce, down 3.2% and headed for its lowest finish since June 2020. On Tuesday, prices had settled at their lowest since July of last year.
