Gold price ends slightly higher following a recent drop to three-week lows
New York (May 2) Gold prices finished with a slight gain Tuesday, a day after settling at the lowest level in three weeks as investors awaited the outcome of the Federal Reserve’s two-day policy meeting.
The central bank’s statement due Wednesday afternoon will be closely watched for clues on the pace of future interest-rate hikes and for the Fed outlook on the U.S. economy.
June gold GCM7, +0.18% tacked on $1.50, or 0.1%, to settle at $1,257 an ounce, after ending at $1,255.50 on Monday—the lowest settlement since April 10 for a most-active contract, according to FactSet data.
Silver for July delivery SIN7, +0.05% lost 1.1 cents, or nearly 0.1%, to $16.831 an ounce.
Gold and silver prices have generally declined since mid- to late-April, as geopolitical tensions, particularly those associated with the elections in France, have started to recede. Precious metals tend to benefit from haven demand amid uncertainty. Gold has ended lower four out of the past six sessions, while the silver contract has declined in nine of the past 10.
Since reaching a recent peak of $1,294.10 an ounce on April 18, gold has failed to hold on to important technical support levels. Some technical analysts say bullion’s recent retreat below $1,260 may amplify bearish sentiment in the near term.
“Gold bulls have succumbed to selling pressure by losing the battle to defend the $1,260 support. While the metal could still be supported by risk aversion in the medium to longer term, the break below $1,260 may entice sellers to send prices toward $1,240,” said Lukman Otunuga, research analyst at FXTM Research.
Looking ahead, Wall Street expects the Fed to leave rates on hold at the conclusion of its monetary-policy meeting on Wednesday, but will be searching for indications on how quickly Fed Chairwoman Janet Yellen intends on raising rates and for signs of the Fed’s view on the economy.
Rising real interest rates lower the opportunity costs of holding gold because the metal provides no yield, and entices investors to rotate into riskier assets like stocks. Higher rates may also boost the value of the dollar, which usually moves in the opposite direction of the gold price.
The Fed policy statement will come two days ahead of U.S. employment data for April, scheduled to be released on Friday.
The Fed’s outlook and jobs report will influence the U.S. dollar, which often trades inversely to dollar-denominated gold. On Tuesday, the ICE U.S. Dollar Index DXY, -0.18% traded nearly flat at 99.05.
Among other metals trade, July copper HGN7, -0.85% fell 0.9% to $2.636 a pound, July platinum PLN7, -0.38% lost 0.7% to $926 an ounce, and June palladium PAM7, +0.09% shed 0.1% to $813.60 an ounce.
Meanwhile, the exchange-traded SPDR Gold Trust GLD, -0.03% was 0.1% lower, the VanEck Vectors Gold Miners ETF GDX, +0.81% rose 0.8%, and the iShares Silver Trust SLV, -0.28% fell 0.4%.
Source: MarketWatch
