Gold fell on Wednesday for a third straight session to settle at another low for the year, with prices finding little reason to make any significant moves on the back of a steady dollar and mixed trading this week among U.S. benchmark stock indexes.
Prices for the metal also barely budged in the immediate wake of the Federal Reserve’s Beige Book. The snapshot of U.S. economic conditions, released after gold futures settled, showed that economic activity expanded at a “slight-moderate” pace in March and early April.
On Wednesday, gold for June delivery GCM9, -0.01% on Comex lost 40 cents, or 0.03%, to settle at $1,276.80 an ounce after trading as high as $1,282.10 during the session. The settlement marked the lowest finish for a most-active contract since Dec. 26, according to FactSet data. In electronic trading shortly after the Beige Book’s release, prices were at $1,276.50.
Gold saw some earlier support, “perhaps off a reversal in the dollar, which at times overnight fell below the Tuesday low,” as well as from “classic technical short covering given the magnitude of the aggressive washout yesterday,” analysts at Zaner Metals said in a note Wednesday.
However, gold has moved lower this week as equity benchmarks in the U.S. flirted with records and the 10-year Treasury note yield TMUBMUSD10Y, -0.32% pushed higher. Rising yields can undercut demand for bullion because the commodity doesn’t carry a coupon.
Bond yields were little changed Wednesday as gold futures settled, but higher week to date. U.S. stocks moved modestly lower for the session and were mixed so far for the week. Evidence of Chinese economic stabilization provided support to equities in Europe and Asia, fueling some risk-on sentiment.
In Wednesday economic data, market participants got a handle on a shrinking trade balance for February.
In the medium term, expect more economic and market uncertainty this year, wrote analysts at Capital Economics in a recent research note.
“Gold is likely to benefit from economic uncertainty this year. We expect particularly strong interest in North American and European ETFs,” Capital Economics analysts said.
From there, the path for gold turns lower.
“However, the improvement in risk appetite will work against gold in 2020 and 2021. We forecast the price of gold to reach $1,400 per ounce by the end of 2019, before slipping to $1,350 and $1,250 at end-2020 and end-2021 respectively,” they said.
In other trading, May silver SIK9, +0.01% added 2.4 cents, or 0.2%, at $14.939 an ounce and May copper HGK9, -0.20% rose 1.3% to $2.968 a pound. June palladium PAM9, -0.20% rose 3.8% to $1,378.60 an ounce, while July platinum PLN9, +0.15% added 0.8% to $891.30 an ounce.
Prices for industrial metal copper have “responded well to news China’s economy expanded by a slightly better-than-expected margin in the first quarter of this year, thanks in part to easing concerns over the nation’s trade spat with the U.S.,” said Fawad Razaqzada, technical analyst at Forex.com. “As well as GDP and retail sales, it was industrial data that surprised the most, suggesting that the world’s second largest economy may have bottomed.”
Read: It’s tough to be pessimistic on silver at current prices, says portfolio manager
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