Gold futures took a significant hit on Thursday, reaching two-week lows after the Federal Reserve released minutes that suggested a hawkish stance on monetary easing. This news caused U.S. Treasury yields to rise, creating a tough environment for non-interest bearing assets like gold. According to SP Angel analysts cited by Dow Jones, Asian trading of gold has been lackluster this week with weakening spreads and muted volumes.
The minutes prompted traders to anticipate a potential rate hike by November, leading to increased Treasury yields and a stronger dollar, which in turn resulted in losses for gold. ActivTrades analyst Ricardo Evangelista noted the impact on the precious metal, with prices dropping for the third consecutive day.
In the metals market, front-month Comex gold for May delivery closed down 2.3% at $2,335.00/oz, marking a 4% loss since hitting a record high on Monday. Meanwhile, May Comex silver settled at $30.824/oz, a one-week low, and May copper closed at $4.8165/lb.
Despite the recent downturn, UBS raised its gold price forecast to $2,600/oz for year-end 2024, citing softer U.S. economic data for April and ongoing geopolitical uncertainties. The firm recommended buying on dips at around $2,300 or below.
Overall, the metals complex has been influenced by the broader risk-off sentiment following the Fed’s hawkish tone, leading to some profit-taking by speculators. The recent price strength in copper, in particular, was said to be disconnected from short-term fundamentals by ING analysts.
