Gold inability break out of its recent $20 range could indicate the the market has numbed to bubbling geopolitical risk.
Gold for June delivery on the Comex division of the New York Mercantile Exchange is down $4.20 at $1,198.9 per ounce. Trade has ranged from $1,197.70 to $1,204.40.
“History has shown how well gold can perform during times of elevated uncertainty – as it happens, the height of the Eurozone crisis a few years ago coincided with gold rallying to record highs,” UBS analyst Edel Tully said.
“It appears that the market has, in a sense, become desensitised to bad news. Eurozone uncertainty is acting more as a cushion for gold right now, rather than an upside catalyst as it had in the past, and prices are clinging to the $1,200 mark,” she added.
Until next week’s FOMC meeting and the current Greece situation is resolved, there are few catalysts to spur the market in either side of $1,200, hence the yellow-metal has been trapped in a $20 range.
While the prospect of Greece’s exit from the eurozone – the so-called ‘Grexit’ – should bolster gold’s credentials as a safe-haven investment, the strong dollar is capping gains. The US currency was essentially unchanged at 1.0725 against the euro.
“Depending on which Fed speaker, a dove or a hawk, is speaking that day or if news comes out of Greece – that’s what is pushing the [gold] price slightly higher or lower,” George Gero, RBC Wealth Management senior vice president said in a telephone interview.
Elsewhere, after initially contradictory reports, the religious festival of Akshaya Tritiya in India does seem to have been accompanied by high gold demand after all, Commerzbank said.
“Several Indian gold traders report that gold demand around the festival, which took place yesterday, was as much as 25 percent higher than last year,” the broker said.
In data out of China this morning, the CB leading index rose just 0.2 percent – the lowest rise since April 2013. Tomorrow will see the release of China’s HSBC flash manufacturing PMI, which might shed light on the rate of the slowdown in the Chinese economy and its implications on metals demand.
Italian retail sales, meanwhile, disappointed at -0.2 percent. EU consumer confidence, US HPI, existing home sales and crude oil inventories are all scheduled for release later today.
Meanwhile, in the wider-markets, Germany’s DAX was down 0.5 percent, while France’s CAC-40 was unchanged.
As for the other precious metals, Comex silver for May delivery was down seven cents at $15.93 per ounce. Trade has ranged from $15.915 to $16.075. Platinum for June delivery on the Nymex fell $13.80 at $1,138.70 per ounce, while the most actively traded palladium contract was at $765.30 down $7.10.
In other markets, light sweet crude (WTI) futures were down 81 cent or 1.4 percent at $55.57 per barrel in the most active contract.
(Editing by Tom Jennemann)
The post Gold down as investor indifference to bad news takes hold appeared first on The Bullion Desk.
No comments:
Post a Comment