Investing.com — fell slightly on Tuesday amid a stronger dollar, as the continuing Chinese equities romp and the timing of a highly-anticipated interest rate hike from the Federal Reserve remained in focus.
On the Comex division of the New York Mercantile Exchange, gold for December delivery traded in a tight range between $1,091.20 and $1,098.60 before settling at $1,095.10, down 1.80 or 0.16%. Following last week’s massive sell-off, gold remains down by more than 9% from its six-week high in mid-June when it peaked above $1,200 an ounce. On Monday, gold rallied somewhat posting its strongest one-day move in more than a month. Last week, the precious metal completed a 10-day skid, its longest in nearly two decades, falling to its lowest level since 2010.
Gold likely gained support at 1,083.50 the low from July 20 and was met with resistance at $1,103.30, the high from July 22. In China, the extended losses from Monday’s freefall closing Tuesday’s session down 1.7%. During the previous session, Chinese stocks fell 8.5%, experiencing their worst day in eight years, amid a decision by regulators to increase equity purchases by the State-backed China Securities Finance Corporation. After peaking above 5,100 in June, a gain of 150% over the previous 18 months, the index has plunged by more than 30% in recent weeks.
China is the world’s largest producer and second-largest consumer of the precious metal.
In the U.S., consumer confidence weakened considerably in July, falling more than six points below analysts’ low estimates. On Tuesday, The Conference Board said its fell to 90.9 for July, citing worries with the Greek and Chinese economies for a decline in consumer expectations. Analysts expected the index to fall slightly to 99.6, after surging to a reading of 99.8 a month earlier.
The , which measures the strength of the greenback versus a basket of six other major currencies, rose to an intraday high of 97.08 before falling back slightly to 96.85, up 0.23%.
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Dollar-denominated commodities such as gold become more expensive for foreign purchasers when the dollar appreciates.
The Fed also cited concerns with the Greek Debt crisis in its June Federal Open Market Committee statement as a factor for leaving interest rates unchanged. The FOMC could provide further hints on whether it will raise rates by September when it completes its two-day meeting on Wednesday.
Gold, which is not attached to interest rates or dividends, struggles to compete with high yield bearing assets in rising rate environments.
Silver for September delivery gained 0.040 or 0.27% to 14.645 an ounce.
for September delivery surged 0.049 or 2.07% to 2.402 a pound.
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