Gold futures waffled around $1,200 in the US on Thursday – a stronger dollar and a divided Federal Reserve have exerted some downward pressure on the complex.
Gold for June delivery on the Comex division of the New York Mercantile Exchange was last down $2.70 at $1,200.40 per ounce. Trade has ranged from $1,192.40 to $1,203.30.
“No one anywhere should be surprised to see gold trading lower as the dollar is trading sharply higher,” Dennis Gartman, editor of the Gartman Letter, said.
“Certainly, we are not surprised by that fact, but once again, gold in euro and/or in yen denominated terms is far-the-better for one should always own gold in the terms of the currency or currencies most likely to be depreciated and clearly that errs in favour of owning gold in these terms, not in US dollar terms,” he added.
The dollar rose to 1.0776 against the euro while gold briefly dipped below $1,200 yesterday following the release of the minutes from the March meeting of the Federal Open Market Committee, which revealed that several members of the policy board judged that the economic data and outlook were likely to warrant beginning normalization at the June meeting.
The members of the Fed’s policy board are locked in what has become an increasingly public debate on when will be the right time to raise interest rates, which have been near zero since December 2008. The current market consensus is that the first increase will happen sometime in the second half of this year.
“In the wake of the release of the FOMC minutes, precious metals have resumed their downward trend. Not because a rate rise is imminent, but because the Fed is seemingly still on course to raise at some point this year or next,” Marex Spectron’s David Govett said.
“No matter when it happens, it will be a negative factor for precious metals and buying them now has very little point,” he added.
In today’s data, German industrial production was as expected at 0.2 percent but the country’s trade surplus at 19.7 billion euros undershot. US unemployment claims and wholesale inventories are due later before the focus switches to China, with its CPI, its PPI, new loans and M2 money supply all scheduled for release in the next few days.
In wider markets, light sweet crude (WTI) oil futures for May delivery on the Nymex were up 92 cents or 1.82 percent at $51.34 per barrel, while Germany’s DAX and France’s CAC-40 were up 0.53 percent and 0.99 percent respectively.
As for the precious metals, Comex silver for May delivery was last down 8.9 cents at $16.365 per ounce. Trade has ranged from $16.200 to $16.510.
Platinum futures for July delivery on the Nymex were last up 10 cents at $1,166.40 per ounce, while the most-actively traded palladium contract at $756.50 was up 80 cents.
The post Mild Fed hawkishness dampens gold rally appeared first on The Bullion Desk.
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