Gold futures settled with a modest decline on Wednesday after posting gains in each of the past four trading sessions, but some experts forecast a recovery for bullion prices as questions about the state of the economy and lofty stock-market valuations persist.
Prices for the metal then moved slightly lower in electronic trading, before moving back up not long after minutes from the Federal Reserve’s March meeting showed that members of the Federal Open Market Committee agreed that that the COVID-19 pandemic was “causing tremendous human and economic hardship” across the U.S. and the world.
The minutes, released about a half hour after gold futures settled, also noted that “indicators of economic activity and employment had turned up recently, although the sectors most adversely affected by the pandemic remained weak.” All members agreed to maintain the “target range for the federal funds rate at 0 to ¼ percent.”
During Wednesday’s session, June gold
fell $1.40, or nearly 0.1%, to settle at $1,741.60 an ounce on Comex, after gaining 0.8% on Tuesday. In electronic trading shortly after the release of the Fed minutes, prices were at $1,742.80.
Gold prices on Tuesday had marked a fourth consecutive gain, the longest such streak in about two months.
The precious metal “had a strong beginning to the week, more so because of the dollar weakening and making lower lows,” said James Hatzigiannis, chief market strategist at Ploutus Capital Advisors.
However, “without a definitive signal that U.S. lockdowns are coming to an end, I believe there will be no interest for precious metals,” he told MarketWatch. If the economy shows signs of picking up, people will start spending more, boosting physical demand for gold, he said.
“Some slight positives have been developing: encouraging economic numbers from China and the U.S. and we hope demand will pick up soon,” said Hatzigiannis. Without signals that lockdowns are coming to an end in China and the U.S., “gold will most likely just be coiling around at this level and everything else is just noise.”
On Wednesday, gold moved lower, partly due to a “lack of interest,” said Jeff Wright, chief investment officer at Wolfpack Capital. “Runaway and non-targeted wasteful U.S. government spending could wreck the U.S. dollar and boost gold but to date, this is only theoretical not our market reality,” he said.
Some commodity experts, meanwhile, believe that gold’s decline may be limited if investors doubt that equity markets will continue to run to records.
“Market players believe that a large part of good news is already built into the equity market, and now perhaps could be the time for investors to take some breather,” writes Naeem Aslam, chief market analyst at AvaTrade in a note. That would favor investment in gold. “Concerns around inflation are real, and they are further fueling the momentum in the gold price,” Aslam said.
Rounding out action on Comex Wednesday, May silver SIK21 edged up by less than 0.1% to $25.25 an ounce and May copper
fell by 1.5% to nearly $4.06 a pound. July platinum
settled at $1,231.90 an ounce, down 0.7%, while June palladium
shed 2.6% to $2,621.10 an ounce.