Gold Futures Fall for Third Day as Dollar Gains Squelch Demand

  • The greenback advances for a third day against the euro
  • Gold erases earlier gains of as much as much as 1.1%

Gold futures fell for a third straight day, the longest slump in five weeks, as a rally in the dollar trimmed demand for the metal as an alternative asset. 

The greenback rose for a third day against the euro as traders awaited a U.S. jobs report Friday that may give a better idea of whether the Federal Reserve will raise interest rates next month. The dollar has been supported this week as two regional Fed presidents said a rate increase should be considered at the central bank’s June meeting. Gold advanced as much as 1.1 percent earlier.

“The rally slowly faded as the dollar strengthened,” David Meger, the director of metals trading at High Ridge Futures in Chicago, said in a telephone interview. “That dollar strength is certainly pressuring gold.”

Gold futures for June delivery slipped 0.2 percent to settle at $1,272.30 an ounce at 1:58 p.m. on the Comex in New York, capping the longest slump since March 28.

Bullion has rallied 20 percent this year after three straight annual losses, helped by speculation that the Fed will be slow to tighten monetary policy amid global risks to economic growth. Low borrowing costs are a boon to gold because it doesn’t offer yields or dividends.

Holdings in exchange-traded funds backed by the precious metal rose by 4.09 metric tons to 1,789.03 tons, the highest since December 2013.

  • Silver futures climbed on the Comex, while platinum and palladium gained on New York Mercantile Exchange.
  • Spot silver prices will average $16.80 an ounce in the fourth quarter, up from $14.77 a year earlier, as mine supply falls amid increasing investment demand, according to Erica Rannestad, a senior analyst at Thomson Reuters GFMS.
  • Mine supply seen by GFMS declining in 2016 for first time in 13 years as production cuts continue in lead and zinc mines, where silver is a byproduct.
Before it's here, it's on the Bloomberg Terminal.