Gold futures finished sharply higher Tuesday, clawing back from a steady decline that had pushed the commodity early this week to its lowest finish since December, as a brawny dollar paused its advance.
Industrial metals, meanwhile, remained in focus, amid trade friction and questions about China's economic expansion. Platinum prices posted a Tuesday rebound after marking their lowest settlement since late 2008. Copper prices extended losses to a fifth straight session.
August gold GCQ8, +0.34% rose $11.80, or nearly 1%, to settle at $1,253.50 an ounce. The contract shed 1% to settle at $1,241.70 Monday. With the stuttering start this week, August gold futures were over 5% so far in 2018.
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The most popular exchange-traded fund that tracks gold, the SPDR Gold Trust GLD, +1.01% rose 1%. It has seen a 4% year-to-date retreat.
The ICE U.S. Dollar Index DXY, -0.29% was down 0.4% at 94.613, knocked lower by a recovering euro as Germany averted a political crisis. The index was still up 2.7% so far this year.
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Interest-rate expectations, and with them, a higher dollar, have almost exclusively accounted for gold's retreat. Higher rates dull the appeal of nonyielding bullion, while a firmer dollar makes the gold priced in the U.S. unit less appealing to investors using another currency.
The greenback's weakness Tuesday "points to profit-taking ahead of key events later on in the week," said Fawad Razaqzada, technical analyst at Forex.com. "These include, among other things, U.K. services PMI on Wednesday; the [latest] FOMC meeting minutes on Thursday and the June employment reports from both North American nations on Friday."
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Dollar-pegged gold has also decidedly turned lower even as uncertainty over global growth and anxieties about escalating trade tensions-factors that would typically provide a lift for the commodity-have intensified, weighing on prices for industrial metals.
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Longer-term headwinds could remain in place for the metals complex. Andrew Lane, director of basic materials equity research at Morningstar, points to two primary metals markets factors in a mostly downbeat note on an "overvalued" basic materials stock sector.
"Miners and industrial metals companies we cover remain substantially overvalued, reflecting our expectation of a structural change in demand growth from China as its economy matures and makes the transition toward less commodity-intensive and more consumption-driven growth," Lane said.
Also, "gold is among the few mined commodities that isn't directly tied to the fortunes of Chinese fixed-asset investment, but as the U.S. Federal Reserve continues to pursue rate increases, prices look primed to fall," he added. "Higher inflation has buoyed gold prices but should only strengthen the central bank's resolve."
As for the trade conflict's more immediate twists, President Donald Trump on Sunday said he sees his threat to impose global auto tariffs as his biggest weapon to extract concessions from trading partners.
Against that backdrop, platinum, used in catalytic converters, took the biggest hit among major Comex metals before a Tuesday rebound sent October platinum PLV8, -0.30% surging by $32.90, or 4%, to end at $846.30. The contract dropped more than 5% Monday to finish at $813.40 an ounce. FactSet data show that as the lowest most-active contract settlement since December 2008.
September copper HGU8, +0.27% fell 0.9% at $2.917 a pound, the lowest for a most-active contract since August of last year, FactSet data show.
Prices of the metal, used widely in construction applications, have tumbled roughly 11% since June 7 as China's trade relations and any economic fallout are watched.
Amid an escalating trade dispute with the U.S., growth in China's manufacturing sector cooled slightly in June, a private survey showed earlier this week.
"Somewhat softer economic growth in China-as evidenced by the slight fall in the unofficial PMI-can explain some of the weakness in industrial metals prices," analysts at Capital Economics said in a note.
Around the rest of the metals complex, September silver SIU8, +0.29% rebounded Tuesday, up 1.3% to $16.043 an ounce. It marked the lowest finish since mid-December on Monday. The most popular exchange-traded fund that tracks silver, the iShares Silver Trust SLV, +0.80% rose 0.8%.
September palladium PAU8, +0.14% added 0.4% to $938 an ounce.