Gold futures slipped Monday from the roughly one-week high hit in the previous session as stock-market stability, even with futures markets pointing south, cutting demand for the haven metal ahead of a busy week for Federal Reserve policy and key U.S. jobs data.
Monday data showing that profits at Chinese industrial firms grew for the first time in four months set a relatively upbeat tone for riskier global stock markets, nicking precious metals prices, although gold’s losses were limited as U.S. stocks looked like they might not take cues from their global counterparts.
“Since quite some time it’s been a risk friendly market, with equities on the rise. Gold prices are also trading below a very important level of $1,300, which is weighing on the market,” Commerzbank analyst Eugen Weinberg said.
Early Monday, gold for June delivery GCM9, -0.47% fell $6.60, or 0.5%, to $1,282.70 an ounce. The most-active contract logged a weekly gain of 1% for last week. May silver SIK9, -0.63% fell 9 cents, or 0.6%, at $14.915 an ounce, with the precious metal ending last week up 0.3%.
As for other markets, the ICE Dollar Index, DXY, +0.03% which tracks the value of the buck against six of its trading rivals, was flat Monday, easing back in the wake of a recent run to its highest level in about two years. The 10-year Treasury note yield TMUBMUSD10Y, +0.29% was at 2.508%, while indications for the Dow Jones Industrial Average DJIA, +0.31% and the S&P 500 index SPX, +0.47%
Gold futures finished higher Friday and for last week after a quarterly reading of the pace of growth of the U.S. economy came in better than expected for the first three months of the year, up 3.2%. But details of the report raised questions about the underlying strength of the economy. There was little fresh evidence in the report to suggest the Federal Reserve would crank up interest-rate hikes soon.
Federal Reserve policy makers are fully expected to leave interest rates on hold when they conclude a two-day meeting on Wednesday. But the statement and Chairman Jerome Powell’s remarks will be closely watched for clues to their thinking.
Some investors continue to look for the Fed to cut rates before the end of the year, even after data Friday showed the U.S. economy started 2019 on a stronger-than-expected footing. That’s because underlying components of the report on first-quarter gross domestic product appeared less impressive and, moreover, due to continued signs that inflation remains subdued. Later in the week, the government’s estimate of April jobs growth is due on Friday.
Softness in appetite for risky assets, like stocks, can provide support for haven gold, while a cooling of the dollar’s recent uptrend and lower bond yields could also buttress bullion because stronger greenback can make the commodity relatively more expensive to international buyers. Separately, subdued yields can diminish the relative value of purchasing government paper over gold, which doesn’t bear a yield.
Among other metals, May copper HGK9, -0.57% fell 0.6% to $2.869 a pound after a weekly loss of 1.1%. July platinum PLN9, -0.55% fell 0.5% to $899 an ounce after it slipped last week, while June palladium PAM9, +0.15% fell 0.2% at $1,444.10 an ounce, after a 3.5% advance for last week.
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