Gold Ends Near Steady; Rebound in U.S. Dollar Index Limits Gains
New York (May 8) Gold prices ended the U.S. day session near unchanged in quieter trading Thursday. Early gains that came from short covering and some bargain hunting were offset by a strengthening U.S. dollar index as the trading day progressed. June gold was last up $0.70 at $1,289.60 an ounce. Spot gold was last quoted down $0.10 at $1,290.25. July Comex silver last traded down $0.172 at $19.17 an ounce.
The U.S. dollar index Thursday hit a multi-month low but then made a strong rebound to trade higher on the day. When the greenback bounced the gold market saw some increased selling pressure surface. Still, the greenback continues in a near-term price downtrend on the daily chart. The dollar bears are still in technical control, which is a bullish underlying factor for most of the raw commodities, including precious metals.
The European Central Bank at its monthly monetary policy meeting made no change in ECB monetary policy, as expected. However, there is growing pressure on the ECB to implement further monetary policy stimulus measures, amid worries about price deflation in the European Union. The Euro currency is at a multi-week high against the U.S. dollar, and the strength of the common currency is also a concern to many European officials and another reason to EU interest rates. ECB President Mario Draghi said it his press conference following the ECB meeting that the bank could move to lower interest rates or inject more monetary policy stimulus at its meeting in June.
Fed Chair Janet Yellen spoke to the U.S. Congress again today, this time to a Senate committee. Her remarks were about the same as those she made Tuesday to the Joint Economic Committee of Congress. The take away from this week’s Yellen comments is that the U.S. economy is on the upswing, but don’t look for U.S. interest rates to rise any time soon due to a still-struggling housing sector.
The Russia-Ukraine tensions have not gone away, even though other market place matters have garnered the headlines this week. Traders and investors were somewhat assuaged Wednesday when reports said Russian President Vladimir Putin made comments that were deemed conciliatory. Gold and U.S. Treasuries have seen some safe-haven buying in recent weeks, amid the heightened Russia-Ukraine conflict. This matter is not going away soon and will likely see an escalation in tensions. This remains a bullish underlying factor for the gold market.
The London P.M. gold fixing today was $1,291.25 versus the previous P.M. fixing of $1,296.00
