Gold Futures Decline as Dollar Rebound Crimps Demand for Metal

  • Dollar gains amid bets on further monetary easing in Japan
  • Exchange-traded holdings climb 12th day to highest since 2013

Gold futures dropped for the third time in four days as a rebound in the dollar curbed demand for the metal as an alternative investment.

The dollar rose after trading little changed against a basket of 10 currencies. The greenback strengthened versus the yen amid speculation of further monetary easing by the Bank of Japan.

Bullion has rallied 20 percent this year as concerns about the strength of the global economy prompted traders to pare expectations for U.S. rate increases by the Federal Reserve this year. That hurt the dollar and boosted gold’s appeal against interest-bearing assets.

“Gold really is a substitute currency, and as long as there’s uncertainty about what the Fed is going to do or if the Fed raises rates, that’ll drive the dollar higher,” Chris Robinson, a senior trader and risk manager at TopThird.com in Chicago, said in a phone interview. “I think that’s what people are looking at here.”

Odds Fall

Gold futures for June delivery slid 0.3 percent to settle at $1,271.20 an ounce at 2 p.m. on the Comex in New York. 

Odds that the Fed will raise rates before the end of the year are about 54 percent, down from more than 90 percent in January, according to Fed-fund futures data.

Gold demand jumped to the second-highest level ever in the first quarter as investors piled into exchange-traded funds, the World Gold Council said in a report Thursday.

Investors bought gold through exchange-traded products for a 12th straight day. Holdings rose 4.3 metric tons to 1,811 tons as of Wednesday, the highest since December 2013, data compiled by Bloomberg show.

In other metals:

  • Silver futures for July delivery slid 1.2 percent to $17.103 an ounce on the Comex.
  • On the New York Mercantile Exchange, platinum and palladium dropped.
  • Gold rose earlier Thursday after a government report showed filings for U.S. jobless benefits unexpectedly climbed last week to the highest since February 2015.
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