Gold slips as traders assess economic outlook
San Francisco (May 13) Gold futures settled modestly lower on Tuesday, pulling back after recent gains as traders assessed the economic outlooks for the U.S., China and Europe, in an attempt to gauge safe-haven demand for the metal.
Gold for June delivery fell $1, or 0.1%, to $1,294.80 an ounce on the Comex division of the New York Mercantile Exchange. July silver ended at $19.55 an ounce, up less than half a cent.
“Gold’s exposure to Ukraine looks asymmetric,” said Adrian Ash, head of research at BullionVault. “It’s not rising on the crisis, but it might be vulnerable to a resolution.”
And “more confusing is the euro” after a report indicated Germany’s central bank would back further stimulus from the European Central Bank in June if it’s needed to fight low inflation.
“Negative rates and [quantitative-easing] asset purchases sound like a recipe for higher gold and silver prices, but anything which is bad for the euro is good for the dollar,” said Ash.
The dollar rose against the euro following The Wall Street Journal report on the Bundesbank. A stronger dollar can pressure prices for dollar-denominated gold.
Over in the U.S., retail sales rose by a scant 0.1% in April, missing expectations. Business inventories in March also came in lower than analysts expected, rising 0.4%.
The U.S. retail data, “which was very disappointing and has been perceived as a negative signal by the market, has provided some life line for gold,” said Naeem Aslam, chief market analyst at AvaTrade. Gold prices posted gains in the immediate aftermath of the data early Tuesday.
The U.S. first-quarter GDP reading was already weak, and “this retail data shows that the consumption has not picked up in the country,” said Aslam. This may make Federal Reserve members “a little grumpy, which is a positive sign for gold because a weakness in the economy usually brings more demand for [it as a] safe heaven.”
Gold traders also took in the latest economic data from China to help gauge the outlook for gold demand.
