Gold Rises on Fed, Cuts Biggest Monthly Loss Since 2011Debarati Roy and Maria Kolesnikova
Gold futures rose, trimming the biggest monthly loss in more than a year, on expectations that central banks will maintain stimulus measures to bolster economies, while demand for coins and jewelry climbed.
The Federal Reserve will consider renewing its commitment to bond purchases at a two-day meeting that starts today. Euro-area inflation at a three-year low and record unemployment increased pressure on the European Central Bank to lower interest rates. This month, gold futures tumbled 7.7 percent, entering a bear market as some investors lost faith in the metal as a store of value.
“People expect the U.S. to continue with the easing as concerns about a slowdown remain,” Matthew Schilling, a commodity broker at R.J. O’Brien & Associates in Chicago, said in a telephone interview. “There is a consensus among people that central banks globally will stick to easy monetary policies.”
Gold futures for June delivery rose 0.3 percent to settle at $1,472.10 an ounce at 1:43 p.m. on the Comex in New York. The price has climbed 11 percent from a 26-month low of $1,321.50 on April 16. The metal has slumped 12 percent this year.
Reports today on the economy in April showed that the MNI Chicago Report’s business barometer fell to 49, the lowest since September 2009, from 52.4 last month. A reading below 50 signals contraction. Confidence among U.S. consumers climbed more than forecast to a five-month high.
“While the confidence number was bearish for gold, the business barometer was supportive,” Schilling said.
Gold rose 4.2 percent last week, partly as coin demand from mints in the U.S., Australia and U.K. soared after futures plummeted. The volume in the benchmark contract on the Shanghai Gold Exchange surged to a record, and premiums to secure supplies in India jumped to five times the level before the slump. India and China are the world’s largest consumers of the metal.
Holdings in exchange-traded products backed by gold have tumbled 168.22 metric tons in April, heading for a record drop, according to data compiled by Bloomberg.
“The persistent ETF liquidation is a perfect testimony to feeble spec appetite for gold,” Andrey Kryuchenkov, an analyst at VTB Capital in London, said in a report. “Despite the recent bargain-hunting, we still had a lack of follow-through buying from investors, who remain the key driving force.”
Silver futures for July delivery gained 0.1 percent to $24.185 an ounce on the Comex. In April, the price plunged 15 percent, the most in 16 months.
On the New York Mercantile Exchange, platinum futures for July delivery fell less than 0.1 percent to $1,507.20 an ounce. This month, the metal declined 4.3 percent, the third straight drop and the longest slump in almost a year.
Palladium futures for June delivery dropped 0.2 percent to $697.80 an ounce. This month, the price tumbled 9.2 percent, the most since May.