Thomson Reuters GFMS sees lower gold in the short term
By Claudia Assis and Virginia Harrison, MarketWatch
SAN FRANCISCO (MarketWatch) — Gold futures inched lower Wednesday, giving back some of the gains after the previous session’s rally and looking at snapping a three-day winning streak.
Gold for June delivery GCM2 -0.16% shed $3.10, or 0.2%, to trade at $1,657.70 an ounce on the Comex division of the New York Mercantile Exchange.
The metal rallied 1% on Tuesday, spurred by safe-haven interest after last week’s softer U.S. jobs report and as a recent rise in Spanish and Italian borrowing costs had investors worried about the health of the global economy.
Such concerns eased somewhat on Wednesday as bond yields for the two countries pulled back from highs and as European and U.S. stock markets regained traction.
A focus back to euro-zone debt concerns and a rise in risk aversion are “potentially negative for gold unless bullion becomes more sought-after as a safe haven,” said Jim Steel, an analyst with HSBC in New York.
“Increases in euro-zone debt concerns have triggered capital flows into U.S. Treasurys, which in turn boosted the U.S. dollar and weighed on gold. It also weakens other commodities, such as oil, which tend to have a positive price relationship with gold,” Steel wrote in a research note.
However, it may be the yellow metal’s “decoupling from risk assets and resuming its more traditional role of safe haven,” he added.
London-based consultant Thomson Reuters GFMS called for lower gold prices in the short-term, saying euro-zone concerns have abated and expectations for another round of monetary stimulus in the U.S. are lower.
“The low $1,600s came as little surprise and it’s quite possible we’ll see a push even lower, perhaps below $1,550 in the next month or two,” said Philip Klapwijk, global head of analystics for the consultancy.
Medium term, however, GFMS remains bullish on gold. Klapwijk said the September record -- just a couple of bucks away from $1,900 an ounce -- could be “taken out, and a push on towards $2,000 is definitely on the cards before the year is out, although a clear breach of that mark is arguably a more likely event for the first half of next year,” he said.
The broader metals complex was mixed, with silver and copper tracking gold lower.
Silver for May delivery SIK2 -0.82% lost 6 cents, or 0.2%, to $31.62 an ounce. May copper HGK2 -0.11% was flat at $3.65 a pound.
July platinum PLN2 -0.28% rose $1.10 to $1,594.40 an ounce, while palladium for June delivery PAM2 -0.45% added $3.70, or 0.6%, to $639.40 an ounce.
Claudia Assis is a San Francisco-based reporter for MarketWatch.
Virginia Harrison is a MarketWatch reporter based in Sydney.
