Increased interest in haven assets
Aside from gold, silver and platinum also saw a down day on Wednesday, August 2. Silver dropped $0.18 to close at $16.80 per ounce, while palladium fell 0.13% to end the day at $892.20 per ounce.
Palladium has increased a whopping 30.2% on a year-to-date basis. During the last five trading days, it rose about 3.4%. Platinum was the only precious metal that increased on Wednesday, rising 0.47% on the same day.
According to Commodity Futures Trading Commission data, hedge funds and money managers sharply increased their net long positions in gold to a four-week high during the week ended July 25. The interest in the haven metal may be due to the decline witnessed in the US dollar.
The dollar and gold
A weaker dollar often becomes negative for dollar-denominated assets like gold and silver. A higher dollar means that it is more expensive for investors from other countries to buy dollar-based assets such as gold and silver.
However, the relationship between gold (GLD) and the dollar (UUP) may not always persist, and they could move in the same direction instead. Rising global tensions could increase the haven status of gold as well as the dollar. Similarly, a drop in haven demand could push them lower