Gold futures lingered below $1,200 per ounce on Monday as investors piled into equities, while neglecting the precious metals complex.
Gold for June delivery on the Comex division of the New York Mercantile Exchange closed down $9.40 at $1,193.70 per ounce, the lowest price since April 15. Trade ranged from $1,195.10 to $1,209.00.
New York Fed Governor William Dudley today said that he is hopeful that data will support raising interest rates later this year. But even when that does happen, US monetary policy will still not be tight.
“Rather, we will simply be moving from an extremely accommodative monetary policy to one that is only slightly less so,” said Dudley in what will be the last comments from a Fed offical before next week’s FOMC meeting.
These somewhat dovish remarks ignited a powerful rally in equities – the Dow Jones industrial average and S&P were last up 1.17 percent and 1.27 percent respectively. Meanwhile, the dollar spiked by 0.62 percent to 1.0738 against the euro and gold posted a modest loss.
“The combination of a pick-up in risk appetite and the stronger dollar weighed on gold as prices broke below the psychological $1,200 an ounce level,” James Steel, an analyst at HSBC, said.
Elsewhere, the People’s Bank of China’s over the weekend cut its reserve requirement ratio (RRR) by 19.5 percent to 18.5 percent for the country’s largest banks – the second such move this year.
“Gold shrugged off news of policy easing in China,” Steel said. “Bullion’s lackluster price reaction to the rate cut by the PBoC may be due to the policy easing announcement, which is traditionally price supportive, being offset by disinflation concerns, which are historically price negative.”
As for the other precious metals, Comex silver for May delivery closed down 33 cents at $15.895 per ounce. Trade has ranged from $15.82 to $16.34.
Platinum for July delivery on the Nymex fell $18.7 to $1,148.8 per ounce, while the most actively traded palladium contract was at $772.40, down $10.55.
“The dollar remains crucial to the metals’ short-term price direction. We would expect growing momentum in the jobs, manufacturing and housing sectors to bolster the dollar further, weighing on metals prices,” FastMarkets analyst William Adams said.
In other markets, light sweet crude (WTI) futures were down $0.68 or 1.2 percent at $56.42 per barrel in the most active contract.
(Editing by Tom Jennemann)
The post Gold prices tumble while equities surge on Dudley speech appeared first on The Bullion Desk.
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