Gold ends lower, but holds above $1,300
San Francisco (May 6) Gold futures closed lower on Tuesday after a two-session climb, but stayed near a three-week high as flare-ups in Ukraine and uncertainty in the U.S. equities market combined to provide support to the precious metal.
Gold for June delivery to settle at $1,308.60 an ounce on the Comex division of the New York Mercantile Exchange, while July silver tacked on 7 cents, or 0.4%, to $19.645 an ounce.
“Gold is experiencing a wild roller coaster of uncertainty as the daily events and battles in Ukraine come to light,” said Kevin Kerr, editor of CommodityConfidential.com. “Even so, we are seeing cautious investors taking profits on moments of calm.”
Looking ahead, however, “we see overall gold prices remaining very firm with a significant long-term bullish trajectory, although it will be coupled with frequent profit taking during that steady rise,” he said. “Of course if things escalate in the Ukraine and the surrounding countries, then all bets are off as to how far and how fast gold will go much, much higher.”
Ukrainian officials said Tuesday that the situation along the country’s border with Russia has become more unstable , according to a Wall Street Journal report.
A day earlier, gold prices rose to their highest close since April 14, as tensions abroad drew buyers to the perceived safety of the shiny metal, which has reclaimed the closely watched level of $1,300 an ounce.
INTL FCStone analyst Edward Meir said there are so many crosscurrents at play that it’s tough to make a short-term call on where gold is headed.
“We have to suspect that the Ukrainian situation will continue to dominate and provide an element of support going into May, despite the current weakness that greeted the latest round of sanctions,” he said. “We think this crisis is likely going to get worse before it gets better, benefiting such ‘go-to’ markets as gold, the dollar, the yen and U.S. Treasurys at the expense of the euro and equities.”
But Brien Lundin, editor of Gold Newsletter, offered a different perspective on gold. He warned that the recent gain in gold prices is a “sucker’s rally,” and said now is not the best time to buy gold. “Buy during the postcrisis corrections and not during the crisis-fueled rallies,” he said. Read: gold’s gain is a ‘sucker’s rally’, says Brien Lundin.
Meanwhile, in U.S. economic news on Tuesday, the trade deficit fell 3.6% to $40.4 billion in March. Economists surveyed by MarketWatch forecast a deficit of $40 billion.
And in the wake of the upbeat monthly U.S. jobs report released last week, Federal Reserve Chairwoman Janet Yellen will appear before the Joint Economic Committee on Wednesday and before the Senate Budget Committee Thursday, with investors hoping for clarity on the pace of reductions to the central bank’s bond-buying program.
Elsewhere in metals trading, July platinum rose $9.70, or 0.7%, to $1,458.10 an ounce, while June palladium added $1.90, or 0.2%, to $818.40 an ounce.
High-grade copper for July delivery added less than a half cent to end at nearly $3.06 a pound.
