Yahoo Finance Gold below $2,000 in second straight weekly loss
By Barani Krishnan
Investing.com -- Is gold losing its allure already after the power run to $2,000? It might be too early to tell, though a run again to below the key price mark might be giving those long on the yellow metal some consternation.
Gold for June delivery on New York’s Comex settled down $28.60, or 1.4%, at $1,990.50. The session bottom for June gold was $1,982.35. Since its run to a more than three year high of $2,048.60 on April 13, Comex’s most-active gold contract has lost almost 3%. For the current week, it was down 0.6%, after last week’s slide of 0.5%.
The spot price of gold, which reflects physical trades in bullion and is more closely followed than futures by some traders, was down $25.24, or 1.2%, to $1,979.57 by 14:35 ET (18:35 GMT). The session low was $1,971.78. Spot gold reached 2,048.84 on April 13. For the current week, it was down 1.1%, after last week’s modest drop of 0.2%.
This week’s decline in gold began after the dollar and U.S. Treasury yields rebounded from the one-year lows hit last week. Gold is a direct contrarian trade to the dollar. Besides that, a higher dollar tends to weigh on overseas demand for commodities priced in the currency. Higher Treasury yields also sap the appeal of risk-heavy assets, while also limiting flows of foreign capital into the United States.
A relatively softer dollar in the past 24 hours, however, did not help gold.
Still, weighing on gold were concerns that the Federal Reserve will agree on another quarter point increase at its May 3rd rate decision which will bring U.S. interest rates to a peak of 5.25% — versus the pandemic-era rate of just 0.25%.
“Gold remains choppy as we near the end of the week,” said Craig Erlam, analyst at online trading platform OANDA. “Uncertainty over the path of interest rates, which should become much clearer over the next month or two, is driving the indecision we're seeing in gold at the moment.”
While Erlam noted that higher Treasury yields had stalled the rally in the yellow metal, “traders are clearly in no mood to give up on the yellow metal.”
“As things stand, dips are being bought and it will be interesting to see if we see the same on this occasion as well,” he added. “Big support remains around $1,940-$1,960.”
Sunil Kumar Dixit, chief technical strategist at SKCharting.com, concurred.
“Sellers are still eyeing the next Fibonacci leg lower of 38.2% in spot gold that will test the support of $1,955,” said Dixit. “On the higher side, $1,992 is expected to be resistance.”
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