• Spot gold was down 0.7 percent at $1,305.72 by 1:37 p.m. EDT (1737 GMT), off an earlier low of $1,301.51, its weakest since Dec. 29. U.S. gold futures for June delivery settled down $12.40, or 0.9 percent, at $1,306.80 per ounce.
• Gold slid to a four-month low on Tuesday as the dollar strengthened ahead of a U.S. Federal Reserve policy meeting that is being watched for clues on the future pace of interest rate hikes.
• Bullion also looks vulnerable after breaking through chart support in the $1,320/1,317 area, its 100-day moving average and a key retracement of its January to March decline, technical analysts said.
• Gold prices continue to hover near a four-month low even as momentum in the manufacturing sector continues to fade, according to the latest data from the Institute for Supply management (ISM)
Tuesday, the ISM said its manufacturing index showed a reading of 57.3% for April, down from March’s reading of 59.3%. The data was weaker than expected as consensus forecasts were calling for a reading of 58.4%.
• The greenback hit a 3-1/2-month high versus the euro ahead of the Fed meeting starting on Tuesday and moved into positive territory for the year against a basket of currencies.
• "Gold is down, since the dollar is up ahead of the Fed meeting," said Josh Graves, senior market strategist at RJO Futures. "You've also got four (possible) rate hikes this year - bullish for the dollar, bearish for gold."
• While the U.S. central bank is widely expected to stand pat on policy for now, market participants will be closely watching the two-day meet for hints of an interest rate hike in June.
• Gold now looks vulnerable to further losses after breaking through key support levels, according to technical analysts, who study past price patterns to predict the direction of trade.
• "MACD (moving average convergence-divergence) and momentum indicators highlight downside risk and I remain bearish on gold, targeting 1,304.30, the 200-day moving average," ScotiaMocatta said in a note.
• Goldman Sachs analysts do not look for silver to gain ground on gold in the coming months, even though they are bullish on gold itself.
The investment bank Tuesday released a report maintaining its view that gold will climb toward $1,450 an ounce by the end of the year even if real interest rates rise. However, analysts called for the gold-silver ratio to remain stable, meaning that silver stays at a historically weak level relative to gold.
• Two important meetings have the attention of the marketplace this week: The Federal Reserve’s Open Market Committee (FOMC) meeting began Tuesday morning and ends Wednesday afternoon with a statement. Also, a U.S. high-level trade delegation will travel to China later this week to try to avert a trade war between the world’s two largest economies. President Trump late Monday decided to delay by one month implementing on the European Union proposed tariffs on aluminum and steel. Tariffs are in effect for Russia and China.
On Friday is the U.S. employment report from the Labor Department—arguably the most important U.S. data point of the month.
Technically, the gold bulls have lost their slight overall near-term technical advantage. A close below major psychological support at $1,300.00 would open the door to a larger leg down in prices in the near term. Gold bulls' next upside near-term price breakout objective is to produce a close above solid technical resistance at last week’s high of $1,337.60. Bears' next near-term downside price breakout objective is pushing prices below solid technical support at $1,300.00. First resistance is seen at today’s high of $1,317.40 and then at this week’s high of $1,325.90. First support is seen at $1,300.00 and then at $1,290.00. Wyckoff's Market Rating: 5.0
• Silver shed 1.2 percent to $16.11 an ounce, earlier hitting $16.04, a more than four-month low. Palladium declined 2.3 percent to $942.60 an ounce, earlier touching $939.47, a three-week low.
Platinum dropped 1.2 percent to $892.10 an ounce. The white metal used in autocatalysts and jewelry dipped earlier in the session to $888.50, its lowest since Dec.18. It was the biggest faller among major precious metals last month, sliding 2.7 percent in a third straight monthly loss.
Reference: Reuters, Kitco
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