Gold prices settled higher Wednesday, then pulled back in electronic trading as the U.S. Federal Reserve’s snapshot of economic activity around the country appeared to raise the prospects for June interest-rate hike.
Released after the price settlement for gold on Comex, the Beige Book report, which gathers economic anecdotes from across the Fed’s regional districts, shows that the U.S. economy expanded at a “modest to moderate” pace through late May.”
August gold GCQ7, -0.47% rose $9.70, or 0.8%, to settle at $1,275.40 an ounce. It traded at $1,272.90 in electronic trading shortly after the release.
Gold futures, based on most-active contract close of $1,268.30 on April 28, rose roughly 0.6% for the month.
Gold investors have been watching the “stock market rally, which has run so high for so long, and they’re eyeballing the Fed agenda, coupled with Trump news and the fact that we’re living in the midst of the seasonally-weak months of the year for the DJIA DJIA, -0.10% and S&P 500 SPX, -0.05% ” said Adam Koos, president of Libertas Wealth Management Group. “For those reasons, it wouldn’t surprise me to see gold continue its intermediate-term uptrend since the beginning of 2017.”
Gold prices settled lower on Tuesday, pulling back from one-month highs scored last week when geopolitical headlines lured investors back to the relative security of the metal.
The ICE U.S. Dollar Index DXY, 0.09% was down 0.3% Wednesday, poised for a loss of 2% for May. A weaker dollar often provides support for gold, which is most actively traded in the greenback.
On Wednesday, a measure of how well the economy is performing in the Chicago area rose in May to the highest level in 2½ years, while pending-home sales slid 1.3% in April. U.S. nonfarm payrolls are out Friday.
Traders are expecting a nearly 89% probability of a U.S. interest rate increase in June, CME Group’s FedWatch showed.
Higher interest rates tend to be dollar-supportive, cutting demand for dollar-priced gold for investors using other currencies. Higher rates also weigh on demand for gold, which doesn’t bear interest, in favor of yield-bearing investments.
Source: Marketwatch.com
