Gold futures gained Thursday, maintaining a post-Fed statement advance that lifted the precious metal from a two-month low.
The contract added to earlier gains after a flurry of data early Thursday did little to shift the market’s view of an improving U.S. economy and go-slow Fed policy.
The central bank on Wednesday kept a key U.S. interest rate steady, saying that inflation is likely to run near the central bank’s 2% target in the coming months. The Fed didn’t do anything to dispel market expectations that it will lift interest rates for a seventh time since the end of 2015 possibly as soon as next month, as it aims to normalize monetary policy.
Still, there is little sign of alarm at the Fed that could push the panel to move more aggressively than what it is already indicated—raising rates three times in total this year. That stance depressed the dollar, to the benefit of gold.
Post-Fed, “I see gold solidifying and not selling off further this week with ‘medium term’ inflation expectations in FOMC statement” driving that sentiment, said Jeff Wright, executive vice president at Gold Mining Inc.
Thursday morning, June gold GCM8, +0.81% rose $10.30, or 0.7%, at $1,315.80 an ounce, trading just above where it stood in after-hours action as traders digested the Fed statement. Gold had lost $1.20, or 0.1%, to settle at $1,305.60 for Wednesday’s session—the lowest since March 1, according to FactSet data.
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Gold edged higher as the ICE U.S. Dollar Index DXY, -0.20% which measures the buck against a basket of six currencies, was down 0.3% at 92.47. The index on Wednesday rose 0.1% and hit its highest level since late December during the session.
The 10-year Treasury note yield TMUBMUSD10Y, -0.97% fell 1.9 basis points to 2.945%. The closely watched yield has struggled to hold above the 3% line it hit earlier this spring. Higher Treasury yields can spell weakness for gold, which like other commodities offers no yield.
As for economic data, a report showed that jobless claims rebounded slightly from last week’s 49-year low, while another release showed that the U.S. trade deficit fell to a six-month low of $49 billion. A third report, which fits in with the inflation-watching theme, showed that labor costs crept up early in the year.
A final Markit services PMI reading came in at 54.6 for April, compared with 54 in March. Ahead is the Institute for Supply Management’s nonmanufacturing index 15 minutes later. Also at 10 a.m. is factory orders in March.
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On the demand side, overall global gold buying fell to its lowest first-quarter level since 2008, driven by a slump in demand for gold bars and exchange-traded funds backed by the precious metal, according to a report from the World Gold Council released Thursday.
Total gold investment demand fell to 973 metric tons in the first quarter, down 7% from 1,047 metric tons in the first quarter of 2017, the WGC reported. The decline came as total investment demand dropped 27% to 287 metric tons from the same time a year earlier.
In other metals trading, July silver SIN8, +1.10% gained 23 cents, or 1.4%, to $16.600 an ounce.
July copper HGN8, +1.14% changed hands at $3.1005 a pound, up 1%. July platinum PLN8, +1.38% rose 1.2% to $904.90 an ounce, but June palladium PAM8, +0.56% rose 0.8% to $967.45 an ounce.
In ETF action, the SPDR Gold Shares GLD, +0.76% traded up 0.8% and the iShares Silver Trust SLV, +0.81% gained 0.9%, while the VanEck Vectors Gold Miners GDX, +1.21% traded 1% higher.