Gold futures slipped into negative territory on Wednesday amid a pull-back in oil prices, but the precious metal has seen its investor popularity gain due to concerns over global economic health.
Gold futures for June delivery on the Comex division of the New York Mercantile Exchange fell $12.60 or one percent to $1,248.30 per ounce. Trade has ranged from $1,241.40 to $1,258.70.
A rebound in oil prices and a weak dollar was the primary driver for the gold rally, but overnight the oil prices dipped after the Organization of the Petroleum Exporting Countries (OPEC) cut its forecast for global oil demand in 2016.
OPEC cited concerns specifically in Latin America and China and an inability to reduce the supply glut – light sweet crude (WTI) oil futures on the Nymex reacted by dipping 42 cents or one percent to $41.75 per barrel.
“At this juncture we feel the yellow metal may pause for now and potentially retrace somewhat,” MKS PAMP Group said. “$1,240-45 should provide decent support, while $1,260-63 looks a decent barrier for now.”
Investors concerned about global growth saw their suspicions confirmed yesterday when the International Monetary Fund reduced its global growth forecast to 3.2 percent from 3.4 percent, citing continued economic vulnerability in emerging market continues and persistently slow growth in developed nations.
Global uncertainty has aided safe-haven assets like gold, while the introduction of looser monetary policies in Europe and Japan signalled to market participants that the economic recovery is vulnerable.
Paper holdings continue to set new yearly highs for the fifth straight day with ETF’s tracked by FastMarkets seeing inflows of 0.51 tonnes to 1,813 tonnes.
In a packed economic agenda, core retail rales and retail sales in March both unexpectedly disappointed coming in at 0.2 percent and -0.3 respectively – the forecasts called for gains of 0.4 percent and 0.1 percent.
PPI month-over-month in March stood at -0.1 percent, off the estimate of 0.3 percent gain, while core PPI – excluding energy and food components – over the same period slipped to -0.1 percent, missing the consensus of a 0.1 percent uptick.
Later, business inventories, crude oil inventories and the Beige Book are slated for release.
Meanwhile in international equities, Germany’s DAX and France’s CAC-40 were up 2.3 percent and 2.6 percent respectively, while the dollar gained 0.7 percent stronger at $1.1319 against the euro.
“The dollar has been weak recently but it is attempting a rebound, which seems to be causing a headwind for gold,” William Adams, Head of Research at FastMarkets, said. “We are, however, bullish given the revival in investor demand (and what is driving that) and we expect there will be considerable pent-up demand for physical gold into price dips.”
As for other precious metals, Comex silver for May settlement declined 10.7 cents or 0.7 percent to $16.115 per ounce. Trade has ranged from $16.015 to $16.215.
Platinum for July delivery fell $6.10 or 0.6 percent to $993.60 per ounce, while the most-actively traded palladium contract stood at $544.20 per ounce, up five cents or 0.1 percent.
(Editing by Tom Jennemann)
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Source: Bullion Desk News
