Gold futures traded lower early Wednesday, falling below a psychologically important mark at $1,200 an ounce, a day after bullion registered its first gain in the past three sessions. December gold gave up $3.20. or 0.3%, at $1,199 an ounce, as worries about trade relations between the U.S. and China dogged the precious commodity. The yellow metal has been buffeted by concerns about rising interest rates and fears that clashes between the largest superpower powers could lead to slack in demand for the metal. Thus far tit-for-tat tariff disputes between Washington and Beijing has supported gains in the U.S. dollar, pressuring commodities that are typically priced in the currency. “Gold’s depreciation has been based on a broadly stronger dollar and prospects of higher US interest rates,” wrote Lukman Otunuga, research analyst at FXTM, in a Wednesday research note. He speculated that gold may face a fresh leg lower if it breaches “the $1,191 level to open the gates towards $1,180.” Other metals that tend to be sensitive to trade spats copper and silver were seeing muted action. December silver was little changed, but edging lower, at $14.140 an ounce, while December HGZ8, +0.63% added a penny, or 0.5%, to reach $2.632 a pound.
Looking ahead, commodity buyers are awaiting monthly data on producer prices as a gauge of inflation. An August report on producer prices is scheduled to hit at 8:30 a.m. Eastern Time, with economists polled by MarketWatch forecasting growth of 0.2%. Gold traditionally is regarded as a hedge against inflation.
Signs of climbing inflation could prompt the Federal Reserve to ramp up its interest-rate tightening cycle, which can bolster the buck. The policy-setting Federal Open Market Committee is set to conclude a two-day meeting on Sept. 26, with expectations that the FOMC will lift rates by a quarter of a percentage point.