Gold price retreats from 2 1/2-month high as Trump walks back immediacy of response to Syria

New York (Apr 12)  Gold futures pulled back in Thursday trading after the haven metal ended Wednesday at its highest level in roughly 2 1/2 months, boosted by geopolitical tensions.

Federal Reserve meeting minutes released after gold’s close Wednesday signaled dedication to higher rates at the U.S. central bank, pressuring metals prices, which had already strung together four days of gains without pause. Still, the so-called haven markets, including precious metals, remained supported by geopolitical shakiness focused on Syria and Russia, as well as lingering trade-war uncertainty.

Gold remained lower early Thursday after a tweet from President Trump shed some doubt on the immediacy of U.S. strike against Syria, offsetting a worrisome tweet from just a day earlier.

Still, “for as long as there is a risk of the conflict between the U.S. and Russia escalating on the back of the Syrian crisis, we believe gold should remain well supported,” said Carsten Fritsch, commodities analyst at Commerzbank, in a note. “Despite the crisis situation, ETF investors are still very hesitant and buying only small quantities of gold,” he added.

Early Thursday, June gold GCM8, -0.82% fell $10, or 0.7%, at $1,350.30 an ounce. The contract had jumped over 1% a day earlier to settle at $1,360. That was the highest finish since Jan. 25.



Gold fell as the ICE U.S. Dollar Index DXY, +0.30% which measures the greenback against six major rivals, was up 0.2% at 89.75. U.S. stock markets, meanwhile, tilted higher after Wednesday’s pronounced drop.

In electronic trading shortly after the release Wednesday afternoon of minutes from the Federal Reserve’s March meeting gold futures fell from the settlement to $1,354.40. The minutes reinforced the view that more interest-rate increases are on tap. Fed members also expressed their belief that inflation will pick up. Higher interest rates can boost the dollar and dull demand for dollar-denominated commodities, although some camps will always consider gold a hedge should inflation run too hot, even if the Fed is raising rates.

“It would appear the central bank has laid the groundwork for another rate hike in June, which would leave them six months to implement the third that is forecast and also leave room for a fourth if it’s deemed necessary by the data in the interim,” said Craig Erlam, senior market analyst with Oanda. “That may be providing some relief for the greenback in the near-term but it’s really struggling to gather any upward momentum”

Another central bank is in the spotlight. The European Central Bank releases its minutes from the March meeting at 12:30 p.m. London time, or 7:30 a.m. Eastern Time. Analysts said focus will be on any clues that the ECB will wind down its aggressive quantitative-easing program this year, with any hawkish hints expected to send the euro higher, and the dollar lower.

As for Thursday’s U.S. economic update, at 8:30 a.m. Eastern Time, reports on weekly jobless claims and March import prices are slated to hit, with economists polled by MarketWatch expecting 230,000 claims.

Trump early Thursday indicated that any strike on Syria may not be imminent, as hinted at earlier this week, although he left open the possibility for such action. Trump on Wednesday signaled in a tweet that a missile attack on Syria wasn’t far off, saying, “Get ready, Russia.”

MarketWatch

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