Gold futures finished slightly lower on Thursday to tally a second straight session of losses, with traders attributing the weakness to so-called technical headwinds after prices touched a nearly three-month high earlier this week.
Prices settled as the U.S. stock market marched higher on the back of a climb in oil futures CLH6, +0.93% which dulled the flight-to-safety allure of the yellow metal, but investors saw recent comments from the U.S. Federal Reserve as somewhat supportive for the metal.
April gold GCJ6, -0.13% the most-active contract, fell by 20 cents to settle at $1,116.10 an ounce on Comex. February gold, the previous most-active contract, had finished with a loss on Wednesday, in a pullback from Tuesday’s settlement above $1,120, its highest since early November.
“Given the rally of the last few days I would have thought gold would be down a lot more today than it is,” Colin Cieszynski, chief market strategist at CMC Markets told MarketWatch.
“I think we’re seeing a switch in gold this week from trading inversely to the stock market back to trading inversely to the U.S. dollar,” he said.
The gains made by stocks and, particularly, crude oil over the past week should spark outflows of capital from defensive havens like gold, he said. On Thursday, however, gold prices ended barely lower.
Gold’s moves come after the metal rose in electronic trading immediate after Wednesday’s updated policy statement from the Fed, which indicated the U.S. central bank will be cautious about raising interest rates in 2016 amid a slowdown in emerging markets.
The statement was taken as supportive to gold, which theoretically should benefit from lower interest rates because precious commodities don’t offer a yield.
The Fed news also kept a cap on the U.S. dollar, at 100 points on the ICE Dollar index DXY, +0.11% and helped to provide some support for dollar-denominated gold prices, said Ciezsynski.
For now, gold traders said they have been watching a resistance level for gold around $1,122 an ounce, which the metal has failed to break. Peter Hug, global trading director at Kitco Metals, told MarketWatch that a breakthrough would be a bullish signal.
But “it remains to be seen if gold can sustain escape velocity,” said Ross Norman, chief executive officer at London metals dealer Sharps Pixley.
In other metals, March silver SIH6, +0.09%  settled 22.7 cents, or 1.6%, lower at $14.232 an ounce, while high-grade copper for March delivery HGH6, -0.15%  lost 1.3 cents, or 0.6%, at $2.052 a pound.
Also under pressure was April platinum PLJ6, +0.17% down $14.20, or 1.6%, at $867.90 an ounce and March palladium PAH6, +0.66% ended $10.25, or 2%, lower at $492 an ounce.
Source: http://www.marketwatch.com/