Gold futures on track for biggest one-day loss for the month
Gold futures on track for biggest one-day loss for the month
Gold futures on Monday looked to post their biggest single-session loss this month so far, with prices easing back after ending last week at their highest in three weeks.
Gold bugs were “indulging in some profit-taking at the onset of the week,” ahead of the crucial U.S. inflation data, Han Tan, chief market analyst, said in emailed commentary.
Markets are hoping that Wednesday’s U.S. consumer-price-index reading will offer clearer signals about the Federal Reserve’s policy outlook, despite recent hawkish rhetoric by Fed officials, he said.
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“Lower-than-expected CPI figures may further bolster hopes for Fed rate cuts in 2024, which could give gold fresh impetus to return closer to its record high,” said Tan. Gold prices settled at a record high of $2,413.80 on April 19.
On Monday, June gold was down $30.60, or 1.3%, at $2,344.20 an ounce on Comex. Prices, based on the most-active contract, were poised for their largest one-day dollar and percentage decline since April 30, FactSet data show. They settled Friday at $2.375 — their best finish since April 19.
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On Friday, the University of Michigan’s gauge of U.S. consumer sentiment fell to 67.4 in a preliminary May reading, down from 77.2 in the prior month. Economists polled by the Wall Street Journal expected a May reading of 76.
The report also showed that Americans’ expectations for overall inflation over the next year rose to 3.5%, up from 3.2% in April, while expectations for inflation over the next five years rose to 3.1% from 3% in the prior month.
Elevated inflation expectations suggest that the Fed may continue to delay its anticipated move to lower interest rates, Rania Gule, market analyst at XS.com, said in market commentary. “This is negative for gold as higher interest rates increase the opportunity cost of holding gold, compared to interest-bearing assets such as bonds or cash.”
Gule said that several Federal Reserve officials delivered hawkish messages last week.
Neel Kashkari, President of the Minneapolis Federal Reserve, indicated on Friday a “wait-and-see” stance on future monetary policy.
On Monday, Federal Reserve Vice Chair Philip Jefferson said, “We continue to look for evidence that inflation is going to return to our 2% target. And until we have that, I think it is appropriate to keep the policy rate in restrictive territory.”