Gold gained and the dollar slumped on Tuesday, as investors sought a degree of haven market protection while sifting through reports that President Donald Trump shared classified information with top Russian officials at a meeting last week.
Gold for June GCM7, +0.35% delivery rose $5.00, or 0.4%, to $1,234.90 an ounce. The contract settled at $1,230 an ounce Monday for its highest finish since May 3, according to FactSet data.
The ICE U.S. Dollar Index DXY, -0.54% which measures the greenback’s value versus euro EURUSD, +0.8930% yen USDJPY, -0.25% and four other major currencies, was down 0.4%. That takes the dollar index to levels last seen around November 10, just a few days after Trump won the U.S. presidential election.
President Trump shared sensitive intelligence obtained from a close U.S. ally with Russia’s foreign minister and ambassador in a meeting last week, according to U.S. officials, the Wall Street Journal reported. That exchange potentially jeopardizes critical intelligence-sharing agreements in the fight against Islamic State. The development was first advanced by the Washington Post. Trump, early Tuesday, defended his actions.
Gold settled at a nearly two-week high Monday after more show of nuclear strength from North Korea, while platinum, copper and silver advanced, finding traction after weekend comments from China about a boost in infrastructure projects.
As for the economic side of the equation, data on single-family housing starts, although part of an otherwise mixed report out Tuesday morning, is unlikely to sway the Federal Reserve from rate-hike plans. That could limit any upside for gold Tuesday.
The pace of home construction eased in April as builders took a breather after a strong start to the year. Housing starts ticked down 2.6% to a 1.17 million annual pace, the Commerce Department said, and stood just 0.7% higher than in the same month last year. Permits fell 2.5% to a 1.23 million pace in April. That was 5.7% higher than a year ago. Still, builders broke ground on more single-family homes in April: starts of single-family homes ran at a pace of 835,000 in April. That’s a sign builders see an improvement in homeownership.
Traders are expecting an almost 100% probability of a U.S. interest rate increase in June, CME Group’s FedWatch showed, but more weak data between now and the meeting could shake confidence. Gold is highly sensitive to rising rates, which increases the opportunity cost of holding assets such as bullion, which don’t bear a yield, while boosting the dollar, in which it is priced.
Meanwhile, industrial metals continued their strong start to the week, after Chinese president Xi Jinping said over the weekend there will be about $100 billion in fresh financing in support for the “One Belt, One Road” initiative.
July platinum PLN7, +1.03% continued its sharp climb this week, adding on $9.70, or 1%, to $938.70. It recorded a two-week settlement high of $928.70 an ounce Monday. June palladium PAM7, +0.00% was up $9.05, or 1.1%, to $806.05 an ounce.