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Gold prices edged higher on Monday, drawing support from a weaker U.S. dollar, after President Joe Biden pulled out of the presidential race, while oil prices reversed early gains in a volatile session.
Spot gold (XAUUSD:CUR) was up +0.28% at $2,401.78 an ounce by 5:28 am ET, after falling more than 2% on Friday, in what some analysts see as a “typical” pullback following record high prices reached earlier in the week.
It was the first weekly decline for gold after three straight weeks of gains, as gold and other assets have been bid upward as investors price in a Federal Reserve pivot to rate cuts as early as September.
Investors were also evaluating the impact of President Joe Biden ending his reelection campaign and endorsing Vice President Kamala Harris.
“I think there is an almost unstoppable process of decoupling between the U.S. and China, it will only become more severe or accelerate if it is a Trump presidency. Gold will certainly benefit from greater geopolitical tensions,” Kyle Rodda, a financial market analyst at Capital.com told Reuters.
Bullion is considered a hedge against inflation and economic uncertainties, but higher rates increase the opportunity cost of holding the nonyielding asset.
For investors, key data points this week include the Q2 advance estimate for GDP growth, personal spending and income, and the June PCE price index, the Federal Reserve’s preferred inflation gauge.
Oil prices meanwhile turned red after rising earlier in the session amid escalating Middle East tensions after Israel carried out airstrikes on a major Houthi-controlled Yemeni port on Saturday. It was in retaliation to the group’s drone strike on Tel Aviv near a U.S. embassy branch office that killed one person on Friday.
Brent crude futures hovered near $83 per barrel, close to its lowest level since mid-June amid renewed optimism for a ceasefire in Gaza.
“The latest positioning data shows that speculators cut their position in ICE Brent by 16,539 lots over the last reporting week to leave them with a net long of 183,890 lots as of last Tuesday. The move was predominantly driven by fresh shorts entering the market, rather than longs liquidating,” brokerage ING said.
On the data front, markets will closely follow the economic figures, after a broader risk-off tone across markets weighed on sentiment last week, and was exacerbated by disappointing economic growth in China, ANZ analysts said.
Recent Commodity Price Movements and A look At Some ETFs
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Energy
- Crude oil (CL1:COM) -0.04% to $78.61.
- Natural Gas (NG1:COM) +2.61% to $2.18.
Metals
Agriculture
- Corn (C_1:COM) -2.09% to $396.28.
- Wheat (W_1:COM) +1.57% to $551.25.
- Soybeans (S_1:COM) +1.52% to $1,112.49.
Commodity ETFs
Gold ETFs:
- SPDR Gold Shares ETF (GLD)
- VanEck Gold Miners ETF (GDX)
- VanEck Junior Gold Miners ETF (GDXJ)
- iShares Gold Trust ETF (IAU)
- Direxion Daily Gold Miners Index Bull 2X Shares ETF (NUGT)
- Sprott Physical Gold Trust (PHYS)
Other Metal ETFs:
- iShares Silver Trust ETF (SLV)
- Sprott Physical Silver Trust (PSLV)
- Global X Silver Miners ETF (SIL)
- U.S. Copper Index Fund, LP ETF (CPER)
- abrdn Physical Palladium Shares ETF (PALL)
Oil ETFs:
- U.S. Oil Fund, LP ETF (USO)
- Invesco DB Oil Fund ETF (DBO)
- U.S. 12 Month Oil Fund, LP ETF (USL)
- U.S. Brent Oil Fund, LP ETF (BNO)
- U.S. Natural Gas Fund, LP ETF (UNG)
- U.S. Gasoline Fund, LP ETF (UGA)
Agriculture ETFs:
- Invesco DB Agriculture Fund ETF (DBA)
- Teucrium Soybean ETF (SOYB)
- Teucrium Wheat ETF (WEAT)
- Teucrium Corn Fund ETF (CORN)
Insight:
– Gold prices received a boost from a weaker U.S. dollar following President Joe Biden’s decision to withdraw from the presidential race.
– Speculation around the decoupling between the U.S. and China could further drive up gold prices.
– Oil prices fluctuated due to escalating tensions in the Middle East, with Brent crude futures hovering near $83 per barrel amid hopes for a ceasefire in Gaza.
