Gold price skids lower as US dollar clambers up
New York (May 1) Gold futures early Tuesday were trading lower, heading for a second loss in a row, as the dollar tested fresh 2018 highs, weighing on the precious commodity.
June gold GCM8, -0.79% fell $10.60 or 0.8%, to $1,308.60 an ounce, after finishing April down by 0.6%. The decline was threatening to push the yellow metal to its lowest closing level since March 1, when it settled at $1,305.20, according to FactSet data.
A strengthening dollar was helping weaken demand for bullion, with the ICE U.S. dollar DXY, +0.47% up 0.4% at 92.24, hanging around its highest levels since earlier in the year.
The buck, which gained 1.9% in April against six major rivals, can influence appetite for dollar-priced commodities, including the yellow metal. The greenback marked its strongest month since around President Donald Trump’s election.
The downturn for gold also comes as the Federal Reserve is set to commence its two-day policy gathering, ending Wednesday. Although the central bank isn’t expected to alter its monetary-policy plan, market participants are anticipating that the central bank will underscore its intention to lift interest rates at least three more times in 2018, which could pressure gold prices that don’t bear interest.
Expectations for further hikes by the Fed were heightened yesterday after the personal-consumption-expenditure inflation gauge, or PCE index, hit the Fed’s 2% annual target for the first time in a year.
Meanwhile, silver futures SIN8, -0.71% were down 11 cents, or 07%, at $16.290 an ounce, after posting a monthly gain of 0.8%.
Nicholas Colas, co-founder of DataTrek, in a Tuesday note said despite the decline in gold futures, demand for related exchange-traded funds was high. “Total inflows to gold-linked ETFs for April-to-date are $1.8 billion, or 90% of all commodity flows,” he wrote. He noted that that fact isn’t a surprise given the heighten volatility in the market that saw the Dow Jones Industrial Average DJIA, -0.61% the S&P 500 index SPX, -0.82% and the Nasdaq Composite Index COMP, -0.75% see muted, albeit choppy, action in April.
In ETF action, the SPDR Gold Shares GLD, -0.73% fell 0.5% early Tuesday and the iShares Silver Trust SLV, -1.22% retreated by 0.5%, while The VanEck Vectors Gold Miners GDX, -0.67% was trading 0.9% lower.
Looking ahead, the Markit manufacturing purchasing managers index for April is due at 9:45 a.m. Eastern, which will be followed by the more closely watched ISM manufacturing index for the same month at 10 a.m.
Construction-spending data for March are slated for release at 10 a.m.
Reuters
