By Rachel Koning Beals
Gold futures slumped Monday as a renewed push higher by stocks and the return of relative calm after a failed weekend coup in Turkey lowered haven demand for precious metals.
Gold’s price drop follows a 2.3% retreat last week. It was the yellow metal’s first weekly loss in almost two months as record-high U.S. stocks and the Bank of England’s pass, for now, on cutting interest rates lured investors into riskier markets away from nonyielding gold.
“World stock markets were mostly higher overnight. A coup attempt in Turkey late Friday that was quickly quashed, but not without violence, has not had a serious impact on the world marketplace. Traders and investors reckon the matter was an isolated incident,” said Jim Wyckoff, senior technical metals analyst at Kitco.
Ankara shut down the coup attempt, but Turkish stocks fell nearly 6% Monday and its currency, the lira, fell as did the euro. That action could warrant mild market caution that likely underpins gold even if outright demand was muted.
Early Monday, August gold GCQ6, +0.26% slipped $1, or 0.1%, to $1,326.60 an ounce. Over the previous six weeks, gold had settled higher on a weekly basis for a cumulative gain of nearly 12%.
The U.S. Dollar Index DXY, +0.05% nosed up 0.1% at 96.61. The dollar and gold typically move inversely although that relationship had been challenged in recent trading sessions. The interest-rate differentials that can drive currency and metals trading likely return to focus this week. The European Central Bank is front and center, with a policy meeting Thursday.
As gold dipped, the Dow Jones Industrial Average looked set to continue its record-breaking run on Monday.