Gold price eases for session and heads for April loss in shadow of firming dollar
London (Apr 30) Gold slumped to start the week and headed for a roughly 0.9% April drop, retreating as the dollar index looked set to close out its best month in more than a year.
The yellow metal’s drop comes even as closely tracked Treasury yields pulled back slightly from the 3% line in Monday trading. Nonyielding gold had lost some demand in favor of riskier assets.
Early Monday, June gold GCM8, -0.68% fell $8.50, or 0.6%, at $1,314.90 an ounce. The contract did end higher Friday, at $1,323.40 an ounce, bouncing off its lowest closing level since March 20. June gold notched a 1.1% drop for last week.
The ICE U.S. Dollar Index DXY, +0.32% was up 0.3% at 91.84. Its moves can influence appetite for dollar-priced commodities, including the yellow metal, to investors using other currencies. The index is on track for a 1.8% April gain, according to FactSet Data. That would be the strongest showing since February 2017, when it also rose 1.8%.
Still, gold’s back-and-forth has been restricted to a narrow trading range so far this year.
“The dollar strength is not having a lasting impact on the technicals of gold and coming into this week, there is little expectation that the range of support band $1,300/$1,310 will be broken,” said Richard Perry, analyst at Hantec. “During 2018, there has not been a closing session within or below $1,300/$1,310 as time and again the corrections have been bought into.”
Investors also have been tracking the 10-year Treasury yield TMUBMUSD10Y, +0.07% , which last week climbed above 3% for the first time since 2014, but then slipped back under that psychologically important level. A jump for that benchmark rate tends to peel money away from riskier assets such as equities.
Economic reports Monday include a look at personal income and spending, the April release on the Chicago area’s business conditions and a March report on pending home sales.
Check out: MarketWatch’s Economic Calendar
On the Federal Reserve front, no speeches are scheduled. The central bank’s policy makers are slated to start a two-day meeting on Tuesday, and they are expected on Wednesday to leave interest rates on hold and signal no change to a tightening path of two more rate hikes in 2018. However, that’s a course of action that some market participants believe is too slow to keep up with mounting inflation risks.
See: Why the Fed could make 4 rate hikes this year
The jobs report for April, set to be released next Friday, could keep market action limited in the days leading up to the release.
MarketWatch
