“While gold price is for now holding just above its 200-day moving Average at $1,839 and trading near the $1,850 level though still with a slight downside bias on the day, despite Thursday’s worse-than-expected US GDP figures and Wednesday’s not as hawkish as feared Fed minutes release. Indeed, in wake of the weak data and modest paring back of hawkish Fed bets, the US dollar is a tad weaker and US yields are nudging lower, a combination that would normally be a tailwind for gold and silver," said Rahul Kalantri, VP Commodities, Mehta Equities Ltd.
“But US equities are rallying and this appears to be weighing on the safe-haven precious metals. US weekly jobless claims fell by 8,000 to 210,000, down from the previous week's unrevised estimate of 218,000 claims. The metals showed no significant or lasting reaction to a weaker-than-expected revision to U.S. first-quarter GPD today, which came in down 1.5%, year-on-year."
In global markets, gold rates were up 0.2% at $1,854 and precious metal is on track for a second straight weekly rise as as the dollar continued to weaken. The dollar index fell en route a second straight weekly decline, making bullion less expensive for buyers holding other currencies.
Minutes of the Fed's May 3-4 policy meeting released on Wednesday highlighted, as the market expected, that most participants favouring additional 50 basis point rate hikes at the June and July meetings.
Higher short-term U.S. interest rates and bond yields raise the opportunity cost of holding bullion, which yields nothing.
Among other precious metals, spot silver dipped 0.2% to $21.95 per ounce, and has gained about 1.5% so far this week.
“COMEX gold trades marginally higher near $1852/oz supported by weakness in US dollar and lower bond yields. The US dollar index has slipped to near 1-month low amid some disappointing US economic data, reduced safe haven demand and increasing debate about Fed’s monetary stance after FOMC minutes. FOMC minutes reaffirmed that the central bank will continue to raise interest rate however market players are assessing possibility that Fed may slow down if economic growth gets affected," said Ravindra Rao, head of commodity research at Kotak Securities.
“Weighing on gold price is equity markets attempt at recovery as Fed’s monetary policy stance is debated. ETF flows also show cautious stance of investors. Gold has come off the 2-week high set earlier this week but is consolidating in a range near $1850/oz and this trend may continue unless there are fresh triggers however tightening expectations may keep pressure on prices."
