Mexico’s proposed higher mining royalties could block nearly $7bn in investments
The Mexican government proposed raising mining royalties under the argument that metal prices have risen in recent years.
The price of gold steadied Tuesday with the effects of economic data and geopolitical developments appearing to neutralize each other.
Spot gold changed hands at $1,287.60 an ounce around 4:15 p.m. EST, down $0.60 from Monday’s close of $1,288.20.
Gold futures for December delivery traded at $1,289.10 per ounce in the afternoon on New York’s Comex, up $0.20, or 0.02%, from $1,288.90 seen Monday.
Earlier on Tuesday, geopolitical concerns took a back seat to improving U.S. economic data, which pushed the country’s currency higher and put downward pressure on gold.
The U.S. dollar gained ground on an expansion in the services sector, with the Institute for Supply Management’s Non-Manufacturing Index advancing to 58.7% in July.
The reading was up 2.7 percentage points from 56% registered in June and the highest since the index’s inception in January 2008. A reading above 50% indicates the sector is growing.
The dollar usually moves inversely to the price of gold.
Gaza truce, Ukraine tension
A truce beginning Tuesday morning between Israel and Hamas seemed to weaken safe-haven demand for the yellow metal.
But, according to Reuters, demand for bullion increased after Poland’s foreign minister said Russia has amassed troops at the border with Ukraine and may invade.
The news caused a sharp fall in U.S. stocks, which also declined on disappointing earnings results from retail giant Target and a tumble in energy shares such as those of Halliburton Co. and Noble Corp., according to Bloomberg.
Violence in Ukraine and Gaza has provided gold with support this year because investors tend to buy the precious metal as a kind of insurance during times of political or financial turmoil.
Meanwhile, spot silver fell $0.26 to $19.87 an ounce on Tuesday from $20.13 on Monday.
