(Bloomberg) -- A strengthening dollar and the rally in equities are spoiling the party for gold bulls.
Gold futures tumbled to the lowest in almost eight weeks after the Trump administration partially refuted a report that it would target Chinese capital market. Speculation is mounting that Washington issued the statement to encourage Beijing to move closer to signing a deal with Washington, a strategist at R.J. O'Brien & Associates said.
Monday's slump trimmed the precious metal's fourth straight quarterly gain, the longest winning streak in eight years. Bulls are retreating after taking their net-long position in gold to the highest in government data going back to 2006.
The strength in the greenback “is the biggest headwind for gold right now,” Phil Streible of RJO said by phone from Chicago.
Bullion has advanced more than 4% since the end of June as investors added more than 200 tons to exchange-traded funds. The rally came as central banks cut rates amid the U.S.-China trade war, which is hurting global growth. Geopolitical tensions and the possibility President Donald Trump will face impeachment have also added to the uncertainty.
“There are a lot of moving parts in terms of U.S.- China trade deals” and concerns about the U.K.'s exit from the European Union that are fueling haven demand for gold, Streible said. “There are also too many geopolitical events that could easily go worse or improve.”
Read More: Gold's Quest for Glory Haunted by Ghosts of Past
Gold futures for December delivery slipped 2.2% to settle at $1,472.90 an ounce at 1:30 p.m. on the Comex in New York, widening this month's loss to 3.7%, the first such decline for a most-active contract since April. Still, futures are up for a fourth straight quarter, the longest winning streak since 2011.
“In the short term, the outlook is pretty bearish,” said Rhona O'Connell, head of market analysis for EMEA & Asia at INTL FCStone Inc. “The technical picture is looking toppy.”
In the spot market, palladium climbed to a fresh record of $1,701.93 an ounce on Monday, before retreating. The metal has gained more than 9% this quarter, with top miner MMC Norilsk Nickel PJSC seeing a widening deficit.
On the New York Mercantile Exchange, platinum futures tumbled 5% to $889.20 an ounce. That took losses since the close on Thursday to 5.7%, the biggest two-day slump since November 2016.
--With assistance from Ranjeetha Pakiam and Elena Mazneva.
To contact the reporter on this story: Yvonne Yue Li in New York at yli1490@bloomberg.net
To contact the editors responsible for this story: Luzi Ann Javier at ljavier@bloomberg.net, Joe Richter
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