PT KONTAK PERKASA FUTURES – Gold futures ended with a loss Wednesday, holding ground at a two-month low, then climbed in electronic trading as the U.S. dollar gave earlier gains on the heels of the Federal Reserve’s monetary-policy statement.
After gold futures settled Wednesday, the Fed kept a key U.S. interest rate steady, saying that while inflation has moved higher, it’s likely to run near the central bank’s 2% target in the coming months.
A benchmark index for the U.S. had been trading a bit higher ahead of the statement, then turned flat to lower shortly after it, providing some support for dollar-denominated gold.
The statement was “pretty much as expected, with the next rise in the Fed Funds Rate deferred to at least June,” said Alasdair Macleod, head of research at Goldmoney.
“We have noticed this last week an increase in short sales in gold and silver futures, which should be confirmed in the Commitment of Traders Report on Friday,” he said. “That being the case, we expect recent weakness in gold and silver to be reversed….”
June gold GCM8, +0.30% was at $1,312.20 an ounce in electronic trading after the Fed news. It had lost $1.20, or 0.1%, to settle at $1,305.60 an ounce for the session—the lowest since March 1, according to FactSet data.
“The Fed’s decision is showing us that the Fed is willing to let its inflation overshoot its 2% target and accommodate growth,” said Peter Spina, president and chief executive officer of GoldSeek.com. “This should be favorable to growing inflation forecasts” and make the appeal of gold grow.
Spina expect gold to “remain firm in the coming weeks, months but it may be too early to see the price make its big breakout move higher,” so for now it looks to finish consolidating around $1,300.”
The ICE U.S. dollar DXY, -0.17% edged down by less than 0.1% to 92.37 Wednesday afternoon. The buck, which gained nearly 2% in April against six major rivals, can influence appetite for dollar-priced commodities, including the yellow metal. The greenback marked its strongest month since around President Donald Trump’s election.
The Fed’s preferred inflation gauge, the personal-consumption expenditure price index, rose to a 12-month rate of 2%, hitting its annual target for the first time in a year and raising concerns that policy makers may be forced to increase rates at a faster clip than the two or three additional increases anticipated in 2018 to tamp down runaway price climbs. Any signals for a more-aggressive Fed in coming months would likely prove negative for gold prices in after-hours action.
Meanwhile, the 10-year Treasury note yield TMUBMUSD10Y, +0.00% inched down to 2.956%, but still traded near the closely watched 3% line. Higher Treasury yields can spell weakness for gold, which like other commodities offers no yield.
In economic news Wednesday, ADP’s April release on private-sector employment showed a 204,000 increase in jobs, offering little sign of a slowdown in job growth. It typically serves as a preview to Friday’s more closely watched jobs report from the U.S. government, also known as the monthly nonfarm payrolls data.
In other metals trading, July silver SIN8, +0.37% split from gold to move up by 24.8 cents, or 1.5%, to end at $16.375 an ounce.
July copper HGN8, -0.24% settled at $3.069 a pound, up 1%. July platinum PLN8, +0.40% fell less than 0.05% to $893.80 an ounce, but June palladium PAM8, +0.08% rose 2.6% to $960.15 an ounce.
In ETF action, the SPDR Gold Shares GLD, -0.05% traded nearly flat% and the iShares Silver Trust SLV, +1.18% gained 1.2%, while the VanEck Vectors Gold Miners GDX, +0.31% traded 0.6% higher.
Source : marketwatch.com