Gold Prices Reverse Gains After Upbeat Philly Fed Data
New York (Apr 16) Gold prices reversed gains Thursday, after regional U.S. data showed stronger-than-expected business activity this month.
Gold for June delivery, the most actively traded contract, was recently down 0.4% at $1196.20 a troy ounce on the Comex division of the New York Mercantile Exchange. Prices hit $1208.80 a troy ounce earlier in the session.
Mid-Atlantic manufacturers are expanding at a faster pace in April, an index of business activity covering the regional factory sector compiled by the Federal Reserve Bank of Philadelphia showed Wednesday. The index rose to 7.5 in April, from 5.0 in March, the Philadelphia Fed said. Economists surveyed by The Wall Street Journal expected a reading of 7.2.
Traders saw the number as an opportunity to take profits in gold, which has been buoyed by a recent spate of weaker-than-expected U.S. data that helped convince investors the Federal Reserve is unlikely to raise interest rates in the next few months.
Expectations of continued low rates tend to buoy prices for gold, which pays its holders nothing and struggles to compete with yield-bearing investments when borrowing costs rise. However, most investors still believe the Fed will raise rates later this year, and have avoided gold in favor of other investments. Gold prices are down 8.5% from their intraday January highs.
“At this point, traders don’t believe they have much reason to hold gold above $1200 an ounce,” said Bob Haberkorn, a broker with RJO Futures.