Gold prices hovered under the key level of $1,900 on Thursday, as investors waited economic data that could offer clues as to whether the commodity’s strength will continue.
Gold futures for June delivery fell around $5 to $1,896 an ounce, while August gold, now the most active contract, dropped roughly $5 to $1,899 an ounce. On Wednesday, gold prices settled atop $1,900 an ounce and turned positive for the year, a day after hitting a high near that resistance level.
Wednesday’s move marked the highest settlement since Jan. 7, according to FactSet data.
Gold’s rise this week had been helped by a weak U.S. dollar steadied and slipping yield on the 10-year Treasury note. Falling yields can benefit precious metals and other commodities, which don’t offer a coupon, by reducing the opportunity cost of holding those assets against yield-bearing ones. A weaker dollar can make assets priced in that currency more attractive to overseas investors.
The push through the $1,900 level inspired some hopes that gold could be entering a new bullish phase.
The “$1,900 mark clearly still holds great allure,” but the commodity faces a tough couple of days, said Carsten Fritsch, analyst at Commerzbank in a note to clients.
“A whole host of U.S. economic data are due to be published today and tomorrow. They have the potential to push the dollar and yields up or down, and by extension gold,” said Fritsch. Included in that heavy batch of data is durable goods orders and initial jobless claims, plus the personal consumption expenditure deflator on Friday.
“The latter is the Fed’s preferred inflation measure. Recently a number of Fed representatives – among them the influential Fed Vice Chair [Richard] Clarida – had hinted that a discussion about tapering is drawing ever closer,” he said.
U.S. central bank officials may be able to begin discussing the appropriate timing of scaling back their bond-buying program at upcoming policy meetings, Federal Reserve Vice Chair Richard Clarida said on Tuesday.
“If the aforementioned data turn out to be robust, the debate could gather pace, strengthening the dollar and yields, and thus precluding any further rise in the gold price,” said the analyst.
Among other metals, July silver edged down by 0.3% to $27.78 an ounce, after slipping 0.6% on Wednesday.
July copper fell 0.4% to $4.55 a pound. July platinum fell 0.4% to to $1,194 an ounce, while September palladium rose 1.2% to to $2,782.50 an ounce.