Gold was little changed on Wednesday in the wake of minutes from the
latest U.S. Federal Reserve meeting, but the precious metal was trading
above the two-week low hit in the last session as stock markets slid on
fresh trade tensions.
Spot gold was steady at $1,273.68 per ounce, having fallen to its lowest level since May 3 on Tuesday at $1,268.97.
U.S. gold futures settled 0.1% higher at $1,274.20.
minutes from U.S. Fed’s last meeting showed policymakers agreed that
their current patient approach to setting monetary policy could remain
in place “for some time.”
“Not many surprises here and not many
were expected. I would note though that this Fed meeting happened before
China backtracked on the trade talks. At the next meeting, almost
certainly there will be more caution,” said Tai Wong, head of base and
precious metals derivatives trading at BMO.
Gold prices rose on Friday and were set to post a
weekly rise as the United States raised tariffs on Chinese goods,
exacerbating fears of a global economic slowdown, while palladium surged
more than 5% on technical buying and short covering.
The United States intensified a tariff
war with China on Friday by hiking levies on $200 billion worth of
Chinese goods. U.S. President Donald Trump said on Friday he was in no
hurry to sign a trade deal with China.
The escalation in the
U.S.-China trade dispute has weighed on stock markets worldwide and
boosted demand for assets viewed as safer.
“Gold is up today and will be up
in the short term until there is a concrete resolution to the
continuing trade tensions between the United States and China,” said Rob
Lutts, chief investment officer at Cabot Wealth Management.
Spot gold gained 0.2% to $1,286.56 per ounce and is up about 0.6% so far this week.
U.S. gold futures settled up 0.2% at $1,287.40.
“Gold is kind of inching high because of instability in the equities market,” said INTL FCStone analyst Edward Meir.
Palladium climbed 4.7% to
$1,354.51 per ounce as of 1:32 pm EDT (1732 GMT), having fallen to its
lowest since Jan. 4 at $1,263.85 in the previous session. The metal was
on track for a second straight weekly decline of about 1.2%.
“The price slide (on
Thursday) temporarily made palladium cheaper than gold again for the
first time since the start of the year,” Commerzbank analysts said in a
“The nice $70 bounce in
the palladium prices is on the back of some modest consumer buying after
the move below $1,300 yesterday and short-covering,” said Tai Wong,
head of base and precious metals derivatives trading at BMO.
For gold, the U.S.-China
trade conflict could also force the U.S. Federal Reserve to cut interest
rates, which could further support bullion prices.
Global anxiety has also
seen an uptick as U.S. bombers arrived at a U.S. base in Qatar to
counter what Washington describes as threats from Iran.
“The Iran situation is
not improving. Trump’s policies have led to a change in the dynamics.
We’re not sure whether the changes will make the situation safer or not
but the uncertainty will affect how investors see gold,” Lutts added.
Bullion was also
supported by a weaker dollar which fell after data showed a
smaller-than-expected rise in the U.S. consumer price index last month.
Silver was up 0.2% at $14.78 per ounce, while platinum rose 2.3% to $863.75.
Silver is on course to register a second straight week of declines, while platinum looks set for a third weekly drop in a row.
Big moves will be there in metals, energies and the US dollar Index only after the outcome of US-China trade talks are known. Till then, the consolidation phase will be there. Focus of the world in on a Chinese slowdown. Long term metal investors are on the sidelines as they expect slower and lower Chinese demand. If the trade talks succeed and all issues comes to an end once and for all, then also, the Chinese economic growth will not happen overnight. It will take at least another quarter to see actual higher and sustained growth.
Gold prices posted a slight decline on Monday, holding above $1,230 an ounce for a third straight session as traders eyed some weakness in the U.S. dollar a day ahead of the closely watched midterm elections.
“Stepping back from today’s price action, what is most interesting for gold is how well it has held its ground despite a significant rally in the U.S. Dollar Index in recent weeks,” Michael Armbruster, managing partner at Altavest, told MarketWatch. “When it comes to gold, it’s easy to be lulled into a sense of complacency when the U.S. dollar is trending higher along with interest rates.”
Gold for December delivery GCZ8, -0.37% edged down $1, or less than 0.1%, to settle at $1,232.30 an ounce, squarely between the day’s high of $1,236.60 and low of $1,228.40.
The contract ended last week slightly lower after a report showed a U.S. job market that was even stronger than expected—data seen keeping the next Federal Reserve interest-rate hike likely on track for December. Higher rates dull the appeal of nonyielding bullion, while boosting the dollar, making dollar-priced commodities less attractive to investors using other currencies.
Still, data Monday showed the nonmanufacturing index compiled by the Institute for Supply Management slipped to 60.3 last month from a 21-year high of 61.6 in September.
The dollar continued its decline after the ISM services survey, with the ICE U.S. Dollar index DXY, -0.06% down 0.3% at 96.286 in Monday dealings. Last Thursday, gold settled at its highest level in more than three months when the index weakened and as stock markets wrapped up a dismal October.
“Increased risk aversion with the equity markets’ selloff has certainly added a risk-averse boost to gold in recent weeks, but if the dollar starts to lose traction due to the reversal of the U.S.-China trade dispute, then this could be a driver of continued gold strength,” said Richard Perry, analyst at Hantec Markets.
Perry is watching $1,236 as a technical “line in the sand” for gold and says a consistently higher market at that price opens the way to a climb toward $1,266.
Armbruster pointed out that “investors should keep in mind that central banks around the world (China, Russia and others) are reportedly adding to their gold holdings. Such behavior by central banks may trump headwinds from the dollar and interest rates and result in a surprise rally.”
The cost of acquisitions has now fallen below the cost of exploration for major miners, and gold prices could benefit from a dwindling resource supply, this according to a recent report from the Edelson Institute.
Sean Brodrick of the Edelson Institute said that if gold prices don’t advance higher from here, many miners are likely to go out of business.
“If companies go out of business, and the only ‘new’ gold ounces come through acquisitions, that means gold supply will go down. And as surely as dawn follows night, prices will go up,” Brodrick said.
His comments come as Barrick Gold recently announced a merger with Randgold, forming the world’s undisputed largest gold miner.
According to the report, the cost of finding gold through exploration has climbed eight-fold since 2007, and gold miners are using up the resources in the ground.
Gold hit a fresh six-week low on Friday as the dollar firmed after upbeat U.S. economic data supported the Federal Reserve’s resolve for steady interest rate hikes, putting the metal on track for its longest monthly losing streak since January 1997.
Gold was down about 1.6 percent in September, its sixth straight monthly loss.
Spot gold rose 0.9 percent to $1,192.53 an ounce. The metal touched its lowest since Aug. 17 at $1,180.34 an ounce earlier in the session, dipping further from a six-week low of $1,181.61 hit on Thursday.
The dollar gained against its peers on Friday as data showed U.S. economic growth accelerated in the second quarter at its fastest pace in nearly four years. Another report showed durable goods rose 4.5 percent in August, rebounding from a revised 1.2 percent drop the month before.
The short-term outlook is bearish for gold as the dollar may see some upside due to an ongoing trade war between China and the U.S. and the Federal Reserve interest rate hike outlook, according to Argonaut Securities analyst Helen Lau.
The Fed raised interest rates on Wednesday and said it planned four more increases by the end of 2019 and another in 2020.
“Robust U.S. economic fundamentals despite an escalation in trade tariffs have done little to lift demand for the non-interest bearing asset,” said Benjamin Lu, commodities analyst at Phillip Futures.
“The outlook for gold prices in the current term remains dim as such in lieu of rising rates and yields amidst buoyant U.S. economic conditions.”
Gold is down more than 13 percent from an April high, largely because of the stronger dollar, which has been boosted by a vibrant U.S. economy and fears of a global trade war. Investors have bought the greenback instead of gold as a safe investment.
Meanwhile, President Donald Trump’s accusation of Chinese meddling in the upcoming U.S. elections marks a new phase in an escalating pressure campaign against Beijing that Washington is pursuing on multiple fronts, senior U.S. officials said on Thursday.
“The trade war continues to favour the U.S. dollar and this will generally dampen gold’s upside,” said Nicholas Frappell, global general manager, ABC Bullion, Australia.
“Large speculative shorts may help cushion weakness as punters keep an eye on levels to close out and take money off the table,” he said.
Among other metals, palladium touched a fresh eight-month high at $1,088.97 an ounce. Silver rose 3.4 percent to $14.68 an ounce and platinum was up 0.7 percent to $815.24.
Gold looks like an attractive buy at the moment, with investor sentiment reaching the bottom in the marketplace, according to one European fund manager.
In a recent interview with Kitco News, Ronald-Peter Stoeferle, fund manager at asset-management firm Incrementum AG and author of last month’s latest In Gold We Trust annual report, said that from a risk-reward perspective, gold looks extremely attractive. He added that he sees several factors that will lead to higher prices by the end of the year.
“I think we have seen the lows in gold for the year,” he said.
Stoeferle’s comments come as the gold market has managed to bounce off its 12-month lows and is currently trading below the initial resistance of $1,260 an ounce. August gold futureswere last at $1,256.40 an ounce, up 0.24%.
The most significant factor driving gold prices higher is falling momentum in the U.S. dollar, said Stoeferle,noting that interest in the greenback is starting to wane as the Federal Reserve moves closer to the end of its interest rate hike cycle.
Gold and silver prices are moderately higher in early U.S. trading Tuesday, on some short covering in the futures markets and perceived bargain-basement buying in the cash markets. Gold hit a 12-month low overnight and silver scored a 6.5-month low on Monday. The key “outside markets” are also in a bullish daily posture for the precious metals markets today, as the U.S. dollar index is lower and crude oil prices are higher. August gold futures were last up $7.10 an ounce at $1,248.80. July Comex silver was last up $0.14 at $15.975 an ounce.
Reports overnight said Monday’s trading in gold exchange traded funds saw the largest outflow of money from those funds since late March. Gold and silver bulls remain stymied by their metals’ inability to rally in the face of the threat of a global trade war and some fresh instability in the European Union.
World stock markets were mixed to higher overnight. U.S. stock indexes are pointed toward higher openings when the New York day session begins.
European stock markets were assuaged today on news that German Chancellor Merkel has apparently avoided a political crisis by coming to agreement with other German lawmakers regarding immigration laws.
In other overnight news, the Euro zone’s producer price index in May was reported up 0.8% from April and up 3.0%, year-on-year. Those numbers were a little higher than expected.
NEW YORK/LONDON, May 23 (Reuters) – Gold prices rose on
Wednesday as the U.S. dollar backed off its highs against a
basket of currencies while investors interpreted minutes from
the U.S. Federal Reserve’s latest policy meeting as dovish.
Most Federal Reserve policymakers thought it likely another
interest rate increase would be warranted “soon” if the U.S.
economic outlook remains intact, minutes of the central bank’s
last policy meeting showed.
Higher interest rates make non interest-bearing assets like
gold less attractive.
However sentiment was dovish, said Bob Haberkorn, senior
market strategist at RJO Futures. “They’re backing off the
inflation target at 2 percent. Just them saying that signals
that [the Fed is] dovish on rates and it doesn’t sound very
aggressive. That should be supportive for metals.”
Policymakers once again debated the inflation path. Several
noted that recent wage data provided “little evidence” of
overheating in the labor market, while some others saw a risk
that “supply constraints would intensify upward wage and price
pressures, or that financial imbalances could emerge.”
Spot gold gained 0.3 percent at $1,294.19 per ounce
by 2:35 p.m. EDT (1835 GMT), after touching its highest since
May 15 at $1,297.84. U.S. gold futures for June delivery
settled down $2.40, or 0.2 percent, at $1,289.60 per ounce.
The dollar, in which gold and other commodities are priced,
rose versus a basket of currencies but came off its
Often used to store wealth in times of political or economic
uncertainty, gold was underpinned by safe-haven support after
U.S. President Donald Trump said he was not pleased about recent
talks with China.
Gold also saw some safe-haven support after President Sergio
Mattarella gave political novice Giuseppe Conte a mandate to
lead the first government in Italy made up of anti-establishment
parties that have vowed to shake up the European Union,
Trump also cited a “substantial chance” his summit with
North Korean leader Kim Jong Un will not take place as planned
on June 12 amid concerns that Kim is resistant to giving up his
Gold has shown reduced volatility in the last few trading
sessions as it attempted a break above $1,300 and prices are
“waiting for a new, clear direction,” said ActivTrades chief
analyst Carlo Alberto De Casa.
Silver fell 0.4 percent at $16.45 an ounce and
platinum was 0.2 percent lower at $904.30 an ounce.
Palladium eased 1.2 percent to $979.10 an ounce.
* China, U.S. have great potential for cooperation- Chinese state
* Specs cut net long position in gold in week to May 15
By Apeksha Nair
BENGALURU, May 21 (Reuters) – Gold slid to a near five-month
low on Monday, as the dollar rose and demand for safe-haven
assets eased after U.S. Treasury Secretary Steven Mnuchin said a
trade war between China and the United States was “on hold”.
Spot gold was down 0.6 percent at $1,283.30 per ounce
at 0658 GMT, after earlier hitting $1,281.76, its lowest since
U.S. gold futures for June delivery were 0.7 percent
lower at $1,282.50.
“Gold price is under pressure as the dollar maintains its
strength,” said Naeem Aslam, chief markets analyst at Think
“‘On Hold’ is a risk-on term…The absence of trade tariffs
and hostile tone between the two countries has also impacted the
gold price more adversely,” Aslam said.
The dollar rose versus the yen and hit a five month-high
against a basket of currencies, after Mnuchin’s comments
downplaying a trade dispute with China, boosting risk sentiment
amid hopes for an easing of trade tensions between the world’s
two biggest economies.
Chinese state media on Monday praised a significant dialing
back of trade tension with the U.S., saying China had stood its
ground and the two countries had huge potential for win-win
“You have this combination of technical factors which is at
the moment un-supportive (for gold). As long as the dollar is on
the firm side, gold is under pressure,” said Dominic Schnider at
UBS Wealth Management in Hong Kong.
The price of gold fell below the psychologically important
$1,300 per ounce level last week for the first time since late
December and has since continued to trade below its 200-day
A stronger dollar makes dollar-denominated gold more
expensive for holders using other currencies. Furthermore,
rising U.S. interest rates, and the expectation that U.S.
Federal Reserve will raise rates again next month, limits
investor demand for non-yielding bullion.
“Investors are looking towards the biggest event of this
week- the FOMC minutes and if the Fed doesn’t tame its hawkish
stance, we would expect more weakness in the gold price,” Aslam
Hedge funds and money managers cut their net long position
in COMEX gold contracts by 21,294 contracts to 31,327 in the
week to May 15, data showed on Friday.
In other precious metals, silver fell 0.8 percent to
$16.30 an ounce.
Platinum was 0.4 percent lower at $879 an ounce,
after marking an over five-month low at $874 earlier.
Palladium rose 0.5 percent at $968.30 per ounce,
after hitting a two-week low at $960.22 on Friday.