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June 15, 2021, 1:57 p.m. EDT

Gold futures extend decline to lowest levels in a month

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By Myra P. Saefong and Mark DeCambre

Gold futures fell on Tuesday, extending their decline to lowest prices in a month, ahead of a policy update from the Federal Reserve due Wednesday, which could set the tone for financial markets over the next few months.

Prices for the precious metal “collapsed like a tower of Jenga yesterday as jitters around the Federal Reserve outlining a path for scaling back emergency stimulus weighed heavily on the precious metal,” said Lukman Otunuga, senior research analyst at FXTM, in a market update.

“Where the metal ends this week is likely to be heavily influenced by the Fed monetary policy meeting,” he said. The Fed will conclude its two-day meeting with a policy statement on Wednesday.

“If the central bank remains dovish and continues to preach the ‘transitory’ mantra, this could inject gold bugs with fresh inspiration to challenge the $1,900 psychological level,” said Otunuga. “Alternatively, any hint of tapering discussions or presence of hawks in the meeting could deal a blow to gold prices,” potentially dragging prices back below the $1,855 level.

Gold for August delivery /zigman2/quotes/214466530/delayed GCQ21 -0.06%   /zigman2/quotes/210034565/delayed GC00 -0.07% fell by $9.50, or 0.5%, to settle at $1,856.40 an ounce following a 0.7% decline on Monday. Prices for the most-active contract marked another finish at the lowest since May 14, FactSet data show.

July silver /zigman2/quotes/210315219/delayed SI00 -0.08% also declined by 35 cents, or 1.2%, to $27.69 an ounce, settling at the lowest since June 3.

Pressure on bullion this week has come as Treasury yields have gained, with the 10-year Treasury yield /zigman2/quotes/211347051/realtime BX:TMUBMUSD10Y +1.12% at around 1.51% on Tuesday.

“U.S. Treasury yields have bounced back from their recent lows, suggesting that some players are wary of the Fed signaling it is thinking about talking about tapering soon. Gold is in this camp too, with the precious metal struggling for altitude lately,” said Marios Hadjikyriacos, investment analyst at XM.

Gold prices are down by about 2% so far in 2021 and have struggled to sustain altitude above $1,900 in recent trade.

Treasury yields have been relatively subdued and the fact that gold hasn’t been able to climb substantially higher in that environment raises concerns for bulls, Ipek Ozkardeskaya, senior analyst at Swissqwote, said.

“If the combination of subdued yields and high inflation couldn’t bring gold bulls to the party, then there’s more interest in riskier and better-rewarding assets,” the analyst said.  

Gold prices initially moved up early Tuesday in the immediate wake of U.S. retail sales and producer price index data.

U.S. retail sales showed a drop of 1.3% in May, suggesting the country is no longer getting a big boost from massive federal fiscal stimulus but consumers are still spending a lot more now than they did a year ago.

U.S. wholesale prices jumped in May for the fifth month in a row in a sign that inflationary pressures tied to the reopening of the U.S. economy are likely to persist through the summer. The producer price index rose 0.8% last month.

The New York Fed’s Empire State business conditions index, however, fell 6.9 points to 17.4 in June, while U.S. industrial production rebounded 0.8% in May.

Other metals traded on Comex ended lower, with July copper down 4.3% at $4.33 a pound. July platinum shed 1.4% to $1,148.60 an ounce, while September palladium /zigman2/quotes/219250747/delayed PAU21 -0.18% settled at $2,764.80 an ounce, up 0.3%.

US : U.S.: Nymex
$ 1,809.50
-1.00 -0.06%
Volume: 5.00
Aug. 5, 2021 12:38a
US : U.S.: Nymex
$ 1,813.30
-1.20 -0.07%
Volume: 13,461
Aug. 5, 2021 12:38a
US : U.S.: Nymex
$ 25.44
-0.02 -0.08%
Volume: 3,536
Aug. 5, 2021 12:38a
add Add to watchlist BX:TMUBMUSD10Y
BX : Tullett Prebon
+0.01 +1.12%
Volume: 0.00
Aug. 5, 2021 12:47a
US : U.S.: Nymex
$ 2,647.00
-4.70 -0.18%
Volume: 91.00
Aug. 5, 2021 12:26a

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