Gold prices were clobbered on Tuesday, with the commodity booking its sharpest daily decline in more than a year, against a backdrop of a strengthening dollar and stabilizing equities.
April gold GCJ8, -1.78% fell $25.10, or 1.9%, to $1,331.20 an ounce, marking the sharpest drop for actively traded futures since Dec. 14, 2016, when gold sank by $33.90, or 2.9% according to FactSet data. Meanwhile, March silver SIH8, -1.75% dropped 27.4 cents, or 1.6%, to $16.438 an ounce.
Precious metals lost ground as the dollar sprung higher following last week’s sharp decline, which has mostly extended a protracted downtrend for the commodity-pegged currency. The ICE Dollar Index DXY, +0.60% was up 0.6% to 89.724, as the greenback made strides against the euro, pound and yen. A weaker dollar can boost commodities priced in dollars, because it makes them cheaper to buy for holders of other currencies.
The popular exchange-traded SPDR Gold Shares GLD, -1.47% fell 1.5%, meanwhile, and the silver- focused ETF, the iShares Silver Trust SLV, -1.49% was trading 1.2% lower late Tuesday.
Last week saw gold register its sharpest weekly gain in more than a year, as it fed off the dollar’s slump. Gold fell modestly on Monday in electronic trade, albeit in thinner action, as many traders took the day off for the Presidents Day holiday.
Peter Hug, global trading director at Kitco Metals Inc., said the focus on rising U.S. debt, from infrastructure spending, tax cuts and a weaker dollar, threaten to push bond yields higher and that dynamic is weighing on precious metals.