Gold futures fell to a six-week low on mounting speculation that the Federal Reserve is moving closer to raising U.S. interest rates.
Gains in consumer confidence are helping to underscore the Fed’s outlook that drags on the economy earlier this year were “transitory.” Sentiment in April increased to the second-highest level in eight years, a private report showed Friday. An improving economy allows the Fed more to room to raise rates, which curb gold’s appeal because the metal generally only offers returns through price gains.
Gold in April fell for the third straight month as the outlook for higher borrowing costs prompts investors to favor assets with better yield prospects, such as equities. Lower metal prices are hurting earnings at mining companies including Goldcorp Inc., which reported Thursday that first-quarter profit missed estimates by analysts.
“It seems all the economic indicators point to the Fed raising sooner rather than later,” George Gero, a precious-metal strategist at RBC Capital Markets in New York, said in a telephone interview. “With the specter of raised rates, gold buyers are scarce.”
On the Comex in New York, gold futures for June delivery fell 0.7 percent to settle at $1,174.50 an ounce at 1:42 p.m. Earlier, the price touched $1,168.40, the lowest for a most-active contract since March 20. The metal fell for the third straight week, the longest slump since late February.
Futures extended declines on Friday after a drop below $1,180 as automatic orders to sell were triggered, Gero said. “It remains to be seen if we hold this $1,170 support area.”
The Fed said this week that U.S. growth will rebound to a “moderate pace,” damping speculation that rate increases may be delayed until 2016. On Thursday, gold erased this year’s gain.
Silver futures for July delivery dropped 0.1 percent to $16.135 an ounce on the Comex. On Thursday, the price plunged 3.3 percent, the most since Feb. 17.
Platinum futures for July declined 0.9 percent to $1,129.70 an ounce on the New York Mercantile Exchange.
Palladium futures for June delivery fell 0.4 percent to $773.75 an ounce.