Gold lost ground Wednesday, unable to find traction higher as demand for equities dulls haven-related demand for the precious metal.
“As risk appetite grows, gold as a safe haven becomes less attractive for investors,” said Carsten Fritsch, analyst at Commerzbank, in a note. “Though gold ETFs still registered inflows yesterday, these were much lower than in the days before. Gold is reliant on high ETF inflows to offset the acute demand weakness in Asia.”
Gold for August delivery on Comex was down $3.90, or 0.2%, at $1,730.20 an ounce. July silver was up 2 cents, or 0.1%, at $18.280 an ounce.
Stock-index futures pointed to a higher start for U.S. equities, which have pushed back to early March levels on optimism over efforts to reopen the economy. Gold has failed to find much in the way of traditional haven support despite incidents of civil unrest across the country. Alongside peaceful demonstrations against police brutality, incidents of looting and arson have occurred.
Meanwhile, Fritsch said gold is reliant on support from exchange-traded fund-related buying amid a dearth of demand from Asia as a result of the COVID-19 pandemic.
“Whether the pent-up demand will be released later in the year is questionable, to say the least. At present nobody can predict what will happen to consumer behavior in India once the lockdown is lifted,” he said.
The situation doesn’t look much better in China, he said, noting “negative net gold imports from Hong Kong and the fact that imports from Switzerland dwindled to zero in April.
“It is possible that the market will soon be flooded by even more surplus gold from China for which there is currently no domestic demand,” he said.