Gold prices headed lower on Thursday, retreating in uneven trade for the yellow metal that looks likely to end a two-session string of gains as investors weigh responses to COVID-19 pandemic.
Analysts noted also that minutes from the policy-setting Federal Open Market Committee helped to fuel worries of deflation which wouldn’t be bullish for gold that tends to draw bids in inflationary environments.
“FOMC minutes reinforced the Committee’s view that a slow economic recovery, they also struck a deflationary chord that isn’t bullish for gold,” wrote Stephen Innes, global chief market strategist at AxiCorp, in a daily research note.
Overall, Fed minutes that were released a half-hour after gold prices officially settled on Wednesday, indicated that the central bank would use “the full range” of their tools to support the economy through the challenging pandemic.
Gold for June delivery on Comex declined $16.10 an ounce, or 0.9%, at $1,736 an ounce, after ending 0.4% higher in Wednesday’s close.
Meanwhile, July silver fell 35 cents, or 2%, to $17.675 an ounce, following a 0.7%, gain in the previous session.
Commodity investors may also look to digest U.S. economic reports on Thursday, including weekly jobless claims due at 8:30 a.m. Eastern Time.
Data out of Europe thus far suggests that a slow recovery from the deadly pathogen that has likely sparked a severe global recession may be showing signs of abating—a fact that may dull gold’s appeal somewhat.
Preliminary composite readings on business activity in the eurozone, showed that France’s purchasing managers index rose to 30.5 in May from 11.1 in April, while the flash Germany PMI composite index rose to 31.4 from 17.4, and the flash U.K. composite index rose to 28.9 from 13.8 in April. Any reading below 50 indicates deteriorating conditions.