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Gold futures headed lower on Wednesday, pressured by a stronger U.S. dollar and calls from some Federal Reserve officials for further interest-rate hikes , as investors digested a fresh batch of eurozone inflation data.
Price action
-
Gold for June delivery
GC00,
-0.55% GCM23,
-0.55%
fell by $14.40, or 0.7%, to $2,005.30 an ounce on Comex after trading as low as $1,980.90. -
May silver
SI00,
+0.46% SIK23,
+0.46%
edged up by 8.7 cents, or 0.3%,to $25.35 an ounce, shaking off an earlier decline. -
June palladium
PAM23,
-1.97%
fell by $42.90, or 2.6%, to $1,600 an ounce, while July platinum added $5.70, or 0.5%,to $1,103 an ounce. -
May copper
HGK23,
-0.35%
declined by 1.3 cents, or 0.3%, to $4.079 a pound.
Market drivers
Gold futures slipped back below $2,000 following hawkish comments by Fed officials about the need for more interest-rate hikes, said Rupert Rowling, market analyst at Kinesis Money.
In remarks to Reuters reported Tuesday, St. Louis Federal Reserve President James Bullard reiterated his call for higher U.S. interest rates to combat inflation and said he doesn’t see a recession taking place anytime soon.
The dip below the psychologically important $2,000 “threshold reflects a macroeconomic environment in which interest rates are still rising with the European Central Bank as well as the Fed set to raise their benchmark rates in May,” said Rowling, in emailed commentary.
“Still, even with the recent pullback, gold remains at very elevated levels considering the price was languishing close to $1,800 an ounce as recently as early March,” he said.
Meanwhile, a stronger U.S. dollar has weighed on gold in recent sessions as the ICE U.S. Dollar Index last week rebounded off its lowest level since early February, helping to curb a torrid rally in the yellow metal that saw it rise for six straight weeks.
In Wednesday dealings, the ICE U.S. dollar index
DXY,
rose 0.2% to 101.93, trading around 0.4% higher week to date.
Several other factors impeded gains in the price of gold as well, said Jim Wyckoff, senior analyst at Kitco.
Bearish outside market forces at midweek include a higher U.S. dollar index, rising U.S. Treasury yields and a drop in crude-oil prices, Wyckoff said in emailed comments.
Data released on Wednesday showed that U.K. inflation is proving sticky, causing a broad selloff in government bonds that forced up yields and translated into a jump in U.S. Treasury rates.
The Office for National Statistics said consumer prices rose 10.1% year-over-year in March, down from 10.4% in February, though above economists’ forecasts for a 9.8% rate.
