Gold price falls for second day, lower for the week as U.S. economy improves
New York (Apr 14) Gold futures headed lower Thursday for a second straight session, as strength in the U.S. dollar and some upbeat economic data helped push prices down for the week.
June gold GCM6, -1.25% fell $13.60, or 1.1%, to trade at $1,234.70 an ounce after losing 1% a day earlier. Wednesday’s decline has positioned the metal for a loss of roughly 0.7% for the week.
May silver SIK6, -0.95% was also down 11 cents, or 0.7%, to $16.215 an ounce.
The rebound in the U.S. dollar index the past two days is a “bearish element for the precious metals markets, as is the improved risk appetite in the world marketplace recently,” said Jim Wyckoff, senior analyst at Kitco.com.
The ICE U.S. Dollar Index DXY, +0.14% gained sharply versus the Chinese yuan CNYUSD, -0.1142% Thursday, with markets caught off guard after the Singapore central bank eased its policy stance and warned of threats to economic growth.
Release of the Federal Reserve’s Beige Book late Wednesday, after gold prices settled, offered some pockets of optimism on the U.S. economy. The report said wages have started to rise, while the prolonged decline in oil production may be coming to an end.
Early Thursday, data showed that weekly U.S. jobless claims fell to 253,000, matching the lowest mark since the end of the Great Recession.
“Traders are not willing to believe any more that another [interest] rate hike is not coming in a few months, especially given the risk taking appetite that we see amid traders,” said Naeem Aslam, chief market analyst at AvaTrade.
Higher interest rates can boost the dollar and dull demand for dollar-denominated commodities.
Still, Atlanta Fed President Dennis Lockhart said in an interview with Bloomberg News that he won’t support a rate increase at the Fed’s next meeting in April.
“The dollar equation for [gold] may not matter that much considering that it was expected that the gold price may fall [to as low as the] $800 mark when the Fed starts to raise rates,” said Aslam. The central bank announced a hike at its December meeting, the first in about a decade.
But “gold still has way too many odds” stacked against it, which may keep the current trend for the gold price” lower, said Aslam.
Mining shares were weaker, with the Philadelphia Gold and Silver Index XAU, -1.57% down 0.5%, while the gold-backed SPDR Gold Trust GLD, -0.93% slid 0.7%.
In other metals trading, May copper HGK6, -0.16% lost less than half a cent to $2.164 a pound. July platinum PLN6, -0.69% fell $4.90, or 0.5%, to $997.80 an ounce while June palladium PAM6, +2.74% added $11.55, or 2.1%, to $553.80 an ounce.
Source: MarketWatch
