Gold on pace for 6-session skid as traders await central-bank moves
Mar 7, 2017
Gold futures on Tuesday were little-changed in early trade, as the metal threatened to log its longest string of losses since early November.
April gold GCJ7, -0.89% was off $1, or less than 0.1%, at $1,225.50 an ounce, after ending Monday in negative territory amid uncertainty surrounding geopolitical risks, highlighted by ballistic-missile tests by North Korea and uncertainty surrounding France’s coming presidential election. Tuesday’s trade puts gold prices on track to mark their longest period of losses, at six sessions, since Nov. 4, according to FactSet data.
Gold has been under pressure on the back of views that the Federal Reserve will raise rates at its March 14-15 meeting. The expectation for higher rates can lift the dollar, which can undercut appetite for assets priced in the currency. Higher interest rates can also diminish the appeal of precious metals like gold, which don’t bear a yield. On Tuesday, the ICE U.S. Dollar Index DXY, +0.10% a measure of the buck’s strength against a basket of six major currencies, was flat at 101.78, but up 0.2% over the past two sessions and 1.4% over the past 30 days.
The Fed’s mid-March meeting will hold particular interest for commodity traders, as the central bank won’t only make a decision on raising rates but will also offer guidance on the pace of coming rate increases. Friday’s closely watched labor-market report may help solidify the Fed’s plans for monetary policy.
Also in focus for investors, is the European Central Bank’s meeting on Thursday, where the central bank will offer an outlook for the health of the European economy that has shown signs of improvement under a continuing policy of central-bank stimulus. Friday.
“Traders are taking positions for (a) European Central Bank meeting (b) U.S. February nonfarm payrolls,” Chintan Karnani, chief market analyst at Insignia Consultant. Karnani said the jobs report will be of particular significance because it will be the first full month of jobs report after Trump took the oath of office on Jan. 20. “Trump has been asking U.S. companies to hire more Americans. First effect will be known on Friday,” he said.
In exchange-traded funds, the SPDR Gold Trust GLD, -0.91% was off 0.3%, the VanEck Vectors Gold Miners ETF GDX, -1.41% was down about 1.1% and the silver ETF, the iShares Silver SLV, -1.60% was off 0.8%.
In economic news, a Tuesday report on the U.S.’s trade deficit in January showed it reached its highest level since early 2012, rising 9.6% at $48.5 billion. Imports rose 2.3% to $240.6 billion, and exports rose 0.6% to $192.1 billion on the month.