Gold price marks first decline in five sessions
San Francisco (Apr 21) Gold futures settled lower on Thursday after four consecutive sessions of gains, and silver prices retreated from a nearly one-year high.
Investors assessed the European Central Bank’s decision to stand pat on interest rates and looked ahead to the U.S. Federal Reserve’s monetary policy meeting next week.
Gold for June delivery GCM6, -0.23% fell $4.10, or 0.3%, to settle at $1,250.30 an ounce on Comex, after tallying a gain of roughly 2.3% over the past four trading sessions. Earlier in the session, gold prices had been as high $1,272.40 an ounce.
May silver SIK6, -0.61% lost 4.5 cents, or 0.3%, to $17.09 an ounce following a 1% rise a day earlier that lifted prices to their highest settlement since May. Silver also had been firmly higher, up at $17.72 an ounce before its retreat.
“Gold and silver prices are pulling back due to some profit-taking, as traders are not sure what to expect from future monetary policy,” said Nico Pantelis, head of research at Secular Investor.
Last month the European Central Bank made interest cuts, additional bond purchases and generous new loans to banks. Todd Buell talks with Tom Fairless about this week's Governing Council meeting.
Metals prices had initially gained and the dollar dipped as the European Central Bank held its primary interest rates unchanged at a monetary policy meeting Thursday. The ECB’s inaction was widely expected.
See: Here’s why Mario Draghi will backpedal on ECB interest rates
But in a news conference, Draghi tried to ground speculation around the ECB’s willingness to use “helicopter money,” an alternative to quantitative easing, to stimulate the economy if needed. The euro EURUSD, -0.0620% weakened and the dollar DXY, +0.07% edged higher, putting some pressure on dollar-denominated metals prices.
See live blog recap: ECB obeys the law, not politicians
The Fed will announce its monetary-policy decision and provide an updated policy statement on Wednesday.
On Thursday, some economic figures from the U.S. showed further improvement, which is “adding to short-term bearish sentiment for precious metals,” said Pantelis. Weekly jobless claims unexpectedly fell 6,000 to 247,000.
The next resistance level for gold is at $1,280, said Pantelis. “If this one breaks to the upside, like we expect, we will see the price of the yellow metal gain higher ground to $1,350.”
But on the downside, “watch the 50-day moving average at $1,236, as a breakdown could trigger a selloff to $1,200,” he said. “Our intermediate target price for silver currently stands at $19.”
Among the exchange-traded funds, the SPDR Gold Trust GLD, +0.47% was up 0.3%. The mining stock-linked Market Vectors Gold Miners ETF GDX, +1.51% climbed 1.4%.
Read: Gold miners ETF’s ‘key reversal day’ pattern warns that rally may be over
Gold, silver and mining stocks are “getting extremely overbought and due for a correction,” said Ken Ford, president of Warwick Valley Financial Advisors. “Once that correction retraces one-third to one-half] of the move up from [the January] low, traders that missed this explosive rally will be looking to get exposure to precious metals.”
Meanwhile, May copper HGK6, +0.49% tacked on 1.3 cents, or 0.6%, to $2.251 a pound, July platinum PLN6, -0.04% rose $3.80, or 0.4%, to $1,031.90 an ounce, while June palladium PAM6, +1.26% gained $13, or 2.2%, to $610.05 an ounce.