Gold tumbled for the sixth consecutive session, eventually hitting a seven-week low with technical selling fueling the latest downturn.
Gold for June delivery on the Comex division of the New York Mercantile Exchange was last down $5.10 or 0.4 percent at $1,224.10 per ounce. Earlier, the contract touched $1,217.70, the lowest since April 5.
The precious metal has sustained a major selloff since the Federal Reserve issued its hawkish statement last Wednesday, while various Fed members have echoed support of a near-term rate hike in recent days.
Equities, US ten-year yields and the dollar rallied since the statement, but even a minor consolidation in the greenback today wasn’t sufficient to alleviate pressure on the yellow metal – the dollar index was last at 95.41.
“Gold prices have shed about $75.00 an ounce this month, amid worries the US Federal Reserve will raise interest rates in June,” Jim Wyckoff, a contributor for Kitco News, said. “Technical damage has been inflicted in the gold market this week, which has accelerated chart-based selling pressure.”
Looking ahead, Fed chair Janet Yellen is scheduled to appear at Harvard on Friday, along with former chairman Ben Bernanke – investors will scrutinise her speech for any references to US monetary policy.
Still, uncertainty about whether the UK will vote to stay in the European Union is creating market anxiety and helping to stimulate safe-haven buying.
“The correction in gold will be a good test of overall market sentiment if a turnaround has indeed occurred,” FastMarkets analyst Andy Farida said. “Perhaps we will see further price weakness in the short term but will be watching to see if it starts to attract physical buying from China and India.”
“Moreover, there are various geopolitical risks such as June Brexit in the coming weeks, which may well support gold prices,” he added.
ETFs started to reflect the recent price downturn, with holdings in the funds tracked by FastMarkets falling 3.75 tonnes. ETFs set repeated yearly highs in recent sessions.
In data today, the US goods trade balance for April at -$57.5 billion was better than the forecast of -$60.1 billion. HPI for March ticked up 0.7 percent, above the economic consensus of 0.4 percent.
Flash services PMI for April came in at 51.2, missing the projected 53.1 estimate and below the previous figure of 52.8.
Meanwhile in US equities, the Dow Jones industrial average and S&P were up 0.9 percent and 0.8 percent respectively, while the dollar softened 0.2 percent to $1.1165 against the euro.
As for other precious metals, Comex silver for July settlement gained 7.6 cents or 0.5 percent to $16.330 per ounce. Trade has ranged from $16.185 to $16.380.
Platinum for July delivery dipped $9.50 or one percent to $994.70 per ounce while palladium at $531.70 was down $6.25 or 1.2 percent.
(Editing by Tom Jennemann)
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Source: Bullion Desk News
