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Gold prices ease off 2-month peak on firm dollar, Powell’s comments

 

·         Gold prices edged lower on Tuesday, after hitting a more than two-month high in the previous session, as a stronger dollar and optimistic comments from U.S. Federal Reserve Chairman Jerome Powell on the economy weighed on the metal’s safe-haven appeal.

 

·         Spot gold was down 0.2% at $1,789.02 per ounce by 0131 GMT. The metal touched its highest since Feb. 25 at $1,797.75 on Monday.

 

·         U.S. gold futures fell 0.2% to $1,788.80 per ounce.

 

·         The dollar index was up 0.1% against its rivals, making gold more expensive for other currency holders.

 

·         The U.S. economy is doing better, but is “not out of the woods yet,” Powell said on Monday in remarks that flagged an upcoming central bank study documenting the disproportionate blow suffered by the less educated and working parents during the coronavirus downturn.

 

·         U.S. manufacturing activity grew at a slower pace in April, restrained by shortages of inputs as rising vaccinations against COVID-19 and massive fiscal stimulus unleashed pent-up demand.

 

·         The Bank of Canada’s signal that it may begin hiking interest rates before the Federal Reserve has lit a fire under the Canadian dollar, but past tightening cycles show faster liftoff may not be sustained.

 

·         South Korea’s consumer inflation accelerated to a near four-year high in April, mainly due to a low base in 2020 and rising oil and agricultural prices. Data from the Asian country is a closely watched indicator as it is considered a bellwether for global trade.

 

·         More than 153.02 million people have been reported to be infected by the novel coronavirus globally and 3,344,235? have died, according to a Reuters tally.

 

·         Hedge funds increase bearish bets on gold as prices can't break $1,800 - CFTC

Hedge funds increased their bearish bets in the gold market as the price has been unable to break above $1,800 an ounce, frustrating many investors as a result.

Analysts have noted that interest in gold has suffered since the start of the year as investors see significant momentum in other commodities. In particular, speculative momentum in copper and palladium have pushed prices to new all-time highs above $4.50 a pound and $3,000 an ounce, respectively.

Many analysts have said that while gold remains an attractive asset long-term hedge against rising inflation, speculative capital will flow to where the momentum is.

"Gold is seeing a lot of competition, but now is not the time to throw in the towel for gold," said Bob Haberkorn, senior commodities broker with RJO Futures, in a recent interview with Kitco News. "Gold is struggling now, but at some point, it will have its day in the sun."

 

·         Gold could hit $1,875, if it crosses $1,800 barrier

 

·         Gold Price Analysis: XAU/USD eyes a sustained move above $1800 amid weaker Treasury yields

Gold (XAU/USD) hit fresh three-month highs at $1798 on Monday, kicking off the week on a solid footing. In Tuesday’s trading so far, gold has eased off the multi-month highs, consolidating the recent upsurge heading into a fresh batch of US economic data. In the view of FXStreet’s Dhwani Mehta, XAU/USD looks north amid a potential bull flag and lower yields.

“Gold has carved out a classic bull flag on the hourly chart after Monday’s rally that followed a brief consolidation in Tuesday’s Asian trading.”

“The Relative Strength Index (RSI) has turned south but remains well above the midline, keeping the upbeat momentum intact.”

 

·         Palladium rose 0.2% to $2,976.83 per ounce, after scaling an all-time high of $3,007.73 per ounce on Friday.

 

·         Silver was down 0.5% at $26.74 per ounce, while platinum dipped 0.1% to $1,228.94.

 

Reference:  CNBC, FXStreet, Kitco