Gold Futures bounces off 6-week low, heads back to $1,200

Gold futures rose on Monday, bouncing off a six-week low set in the previous session, as traders look ahead to economic data in their search for clues when the Federal Reserve will begin lifting interest rates.

Gold for June delivery GCM5, +1.38% rose $17, or 1.4%, to $1,191.50 an ounce on Comex. July silver SIN5, +2.82% jumped 51.5 cents, or 3.2%, to $16.65 an ounce, following declines over the past two trading sessions.

“Recent U.S. economic data has been worse than expected and suggests a moderating growth rate,” said Mark O’Byrne, a director at GoldCore in Dublin. “This has led to increased doubt as to when the Fed will finally lift interest rates from zero, which is supporting gold.”

There were no major economic data releases Monday. The week’s main event happens on Friday, with the release of the April jobs report. Economists surveyed by MarketWatch forecast nonfarm payrolls to rise by 254,000, after a weak rise of 126,000 in March. See: Wall Street awaits pivotal jobs report for April.

On Friday, gold ended at its lowest level in six weeks, with strategists pinning the weakness in part on rising U.S. and German government bond yields.

“It is not easy to find any plausible reasons for the weak prices. One worth mentioning is the noticeable rise in bond yields in the U.S. and Germany, which increase the opportunity costs of holding gold,” wrote strategists at Commerzbank, in a note.

Meanwhile, gold had failed to benefit from weakness in the U.S. dollar, which is often a supportive factor for dollar-priced commodities. A weaker U.S. dollar makes gold less expensive to buyers using other currencies. A strengthening dollar has tended to undercut gold when economic data comes in stronger than expected, noted Georgette Boele, strategist at ABN Amro, in a note.

“It seems like precious metal prices are showing greater sensitivity to positive U.S. data surprises and a higher U.S. dollar than vice versa … this signals that the risk is mainly on the downside in precious metal prices,” Boele wrote.

In other metals trade, July platinum PLN5, +1.97% rose $20.90, or 1.9%, to $1,150.60 an ounce, while June palladium PAM5, +0.92% advanced $5, or 0.7%, to $778.75 an ounce.

July copper HGN5, -0.32% fell a penny, or 0.3%, to $2.92 a pound.

Source: MarketWatch