June Gold settles at $1175.0, down $28.10 for the week
New York (Apr 26) Gold futures traded to their lowest levels of the week losing approximately 1.6 percent for the day and 2.4 percent for the week with today’s settlement under all key moving averages. On Friday alone gold dropped $19.30 and May Silver lost .19 cents to settle at 15.63.5. With disappointing economic data released yet again highlighted by a weak durable goods reading that missed market expectations this morning, the data fueled speculation that the Fed will remain mute on raising short term interest rates.
The Fed begins a two day meeting next Tuesday with a policy announcement Wednesday and most bets show that the Fed will reiterate the language from their March statement. The winner in this stalemate at the Fed has been the stock market with the S&P500 posting new daily highs with the NASDAQ just this week posting a three percent gain. I try not to sound like a broken record but the zero rate environment we are mired in has been a boon for stock prices the last few years while rallies in gold have become selling opportunities. One could of made an argument that the recent weakness in the Dollar should have pushed Gold to at least test recent highs at the 1224.0 level basis June futures. The dollar weakness along with geo-political concerns in the Middle East, economic weakness in Europe and China, and a decent uptick in energies would or should have propelled gold higher. Simply put the rally equities has mitigated any rally in gold and has for the last few years to put it bluntly. The stock market continues to be the investment of choice among investors.
Traders this week were also eyeing the Asian physical markets for signs of increased demand that would support global prices. In China, the second-biggest consumer, premiums fell to about $1 an ounce over the spot from about $2 in the previous day, while in top consumer India, demand is set to taper out after strong sales during Tuesday's Akshaya Tritiya festival. Attention will turn next week to the aforementioned Fed policy meeting next week for stronger clues on when the U.S. central bank will start increasing rates. Raising rates would raise the opportunity cost of holding non-yielding bullion, while boosting the dollar.