Gold futures ended sharply lower Tuesday, pressured by better-than-expected U.S. consumer confidence data and a rise in Chinese manufacturing activity, but prices for the metal posted gains for the month and quarter against the backdrop of concerns over the COVID-19 pandemic.
An index of consumer confidence fell to 120 in March, from a revised 132.6 in February, but some forecasts called for a fall to 115.
The data was “much better than the forecast...and this has triggered the selloff for the gold price,” said Naeem Aslam, chief market analyst at AvaTrade. “But we are still deep in the woods and the number which matters the most for the markets is the US ISM manufacturing number” due Wednesday. See the U.S. economic calendar.
Meanwhile, data out of China showed signs of a modest economic rebound. China’s manufacturing gauge for the March official purchasing managers survey rose to 52, from a record low of 35.7 in the previous month as factories resumed work following monthslong shutdown.
June gold on Comex lost $46.60, or 2.8%, to settle at $1,596.60 an ounce—the lowest finish in just over a week. The contract was up 1.6% from its finish at $1,571.80 on Feb. 28, according to FactSet data. Based on the most-active contracts, gold futures rose 1.9% for the month and gained 4.8% for the quarter, according to Dow Jones Market Data.
Aslam told MarketWatch that a drop below $1,600 was “an opportunity to load more gold in your portfolio.”
Overall, however, trading for precious metals has been marked by concerns about the rapidly moving infection, COVID-19, which was first identified in Wuhan, China in December, but has infected more than 800,000 people and claimed nearly 39,000 lives world-wide, as of Tuesday morning, according to data aggregated by Johns Hopkins University .
The pandemic has shut down business activity in swaths of America and elsewhere across the globe, driving investors to the perceived safety of gold during the period, but the uncertainty about the duration of the illness and the severity of its impact on global economies has made for bumpy trade in gold. Meanwhile, silver futures, which are also viewed as an industrial metal, has been weighed by the prospect of slowing economic expansion in the world.
Meanwhile, gold was under pressure from strength in the U.S. dollar, which most commodities are priced in. A measure of the dollar was gaining strength against a basket of a half-dozen currencies, the ICE U.S. Dollar Index (IFUS:DXY) was little changed Tuesday as gold futures settled. But the currency index was trading up 1% for the month and 2.8% for the quarter. A stronger dollar can make assets priced in the currency comparatively more expensive for buyers using other monetary units.
Rising bonds yields have drawn also some demand away from gold, which doesn’t offer a yield. The 10-year Treasury note yield (XTUP:BX:TMUBMUSD10Y) was at 0.663% in Tuesday dealings, poised for a gain for the month.
May silver , meanwhile, added 2.4 cents, or 0.2%, at $14.156 an ounce, after declining 2.8% on the prior day. Based on the most-active contracts, silver lost about 14% for the month and saw a quarterly decline of 21%.
May copper rose 3.4% to $2.228 a pound, with most-active contract prices ending more than 12% lower for the month, according to FactSet data. July platinum rose 0.8% to $729.90 an ounce, for a monthly decline of over 16%, while June palladium (NYM:PAM20) added 4.9% to $2,304.80 an ounce, for a monthly loss to more than 8%.