Gold futures settled below $1,200 an ounce on Tuesday for the first time in more than a week.
Demand for the dollar-denominated precious metal came as a jump in the Institute for Supply Management’s U.S. manufacturing index to its highest level in more than decade further boosted the dollar.
“Gold bears were back in action on Tuesday thanks to a broadly stronger U.S. dollar,” said Lukman Otunuga, research analyst at FXTM, in a daily note. “With the mighty dollar set to dim gold’s shine and U.S. rate hike expectations denting appetite for the zero-yielding metal further, the outlook remains tilted to the downside.”
“Sustained weakness below the $1,200 psychological level could open a path towards $1,180,” he added.
December gold GCZ8, -0.09% declined $7.60, or 0.6%, to settle at $1,199.10 an ounce, after the yellow metal settled at $1,206.70 an ounce on Friday. In observance of Labor Day in the U.S., Comex-traded metals didn’t settle on Monday. The contract hasn’t settled below $1,200 since Aug. 23.
Gold declined 2.2% in August, representing its fifth consecutive monthly decline—the longest such streak in more than five years, according to FactSet data.
December silver SIZ8, -0.21% dropped 37.7 cents, or 2.6%, to $14.18 an ounce. The contract for gold’s sister metal also added to a lengthy downturn, after registering a fall of about 7.1% for August.
A primary driver for the decline in both metals has been a steadily advancing U.S. dollar, which can make assets pegged to it more expensive to buyers using other currencies, undercutting the appeal of gold and silver.
The ICE U.S. Dollar index DXY, -0.04% firmed by 0.3% in Tuesday trade to 95.459. The index, which tracks the buck’s strength against a half-dozen rivals, rose 0.7% in August and has gained 1.7% over the past three months.
The benchmark dollar index traded near the day’s highs shortly after the ISM said its manufacturing index surged to a 14-year high of 61.3% last month from 58.1% in July. That surpassed the forecast for 57.9% from economists surveyed by MarketWatch.
In exchange-traded metals products, the popular SPDR Gold ETF GLD, -0.51% declined 0.5% and the VanEck Vectors Gold Miners ETF GDX, -2.86% lost 2.8%, while the iShares Silver SLV, -2.49% dropped 2.4%.
Elsewhere in the metals complex, December copper HGZ8, -0.33% settled 6.9 cents, or 2.6%, lower at $2.602 a pound, after the contract lost 6.4% in August. October platinum PLV8, -0.18% fell 1.1% to $778.20 an ounce, after settling on Friday with a monthly loss of roughly 6.6%, while December PAZ8, +0.29% palladium shed nearly 0.3% to $967.50 an ounce, after posting an August climb of 4.5%.