Gold Prices Aim For Upbeat End To Rough Month

Gold futures rose in electronic trade Tuesday, but the precious metal was still in line to post its worst monthly performance since late 2011.

Gold for June delivery GCM3 +0.27% advanced $3.90, or 0.3%, to $1,471.30 an ounce in European trading hours.

A win on Tuesday would mark gold’s seventh advance out of the past nine sessions. But those moves came after a plunge in prices earlier in the month, highlighted by the April 15 slide of $140.30, or 9.3%, gold’s biggest one-day decline since the 1980s.

Gold prices are facing an 8% fall for the month, the sharpest monthly decline since December 2011 when futures tumbled 10.5%. Analysts cited declines in gold holdings among exchange-traded funds, a lowered gold-price forecast from Goldman Sachs and other banks, and worries about central-bank gold sales as reasons for the recent selloff.

But a recovery in the market is being driven in part by evidence of strong demand for physical gold, analysts have said.

On Monday, gold gained $13.80, or 1%, as investors bet the U.S. Federal Reserve will extend its monetary stimulus program and that the European Central Bank will cut its refinancing rate on Thursday, wrote Rivkin global analyst Tim Radford.

“With subdued inflation levels while unemployment remains elevated, there is a strong case for the Federal Reserve to continue stimulating the economy with its $85 billion-per-month bond-buying program,” he said.

“But with a division in opinion amongst Fed board members over whether stimulus is actually benefiting the economy, there is always a risk the current policy setting may end sooner than expected,” Radford wrote late Monday.

The Fed will issue its latest policy statement on Wednesday, and any indication of a sooner-than-expected end to quantitative easing “would likely send risk assets sharply lower,” he wrote.

Following a number of disappointing economic reports from the euro zone, the ECB is widely expected to cut its key rate from 0.75%, where it’s been since July 2012.

In other metals-market moves Tuesday, copper for delivery in July HGN3 -0.06%  was flat at $3.23 a pound.

July platinum futures PLN3 +0.39%  rose $5.50, or 0.4%, to $1,512.90 an ounce, and June palladium futures PAM3 +0.12%  gained 90 cents to $700.10 an ounce.

 

MarketWatch