By Myra P. Saefong and Virginia Harrison, MarketWatch
SAN FRANCISCO (MarketWatch) — Gold futures fell Thursday, looking to break a four-session climb, after a government report showed that the cost of living in the U.S. fell sharply in May.
Prices had found support earlier, climbing to a high of $1,629 amid expectations of fresh monetary policy stimulus.
Gold for August delivery GCQ2 -0.17% shed $3.70, or 0.2%, to $1,615.80 an ounce on the Comex division of the New York Stock Exchange, retreating from a high of $1,629.
Silver for July delivery SIN2 -1.90% also fell sharply, down 65 cents, or 2.3%, to $28.29 an ounce.
“The very weak inflation data from the U.S. clobbered gold despite some relief from the slight selling of the U.S. dollar” after news of a rise in jobless claims, said Richard Hastings, a macro strategist at Global Hunter Securities.
The consumer price index declined by a seasonally adjusted 0.3% last month, the first decrease in two years and the biggest drop since December 2008. Economists surveyed by MarketWatch expected the CPI to fall by 0.2%. Read more on CPI.
“The inflation data was the anvil that plopped onto gold ... knocking it right back to the $1,610 area,” Hastings said. Futures prices touched a low of $1,610.40.
“There continues to be the risk that disinflationary trends will continue to evolve, all of it constraining gold prices into a tight trading range,” said Hastings. Gold often generates support as a hedge against inflation.
Data also released Thursday showed that jobless claims climbed by 6,000 to a seasonally adjusted 386,000 in the week ended June 9, the Labor Department said. Economists surveyed by MarketWatch had projected claims would fall to 376,000. Read more on jobless claims.
The U.S. dollar turned down after the report, with the dollar index DXY -0.19% , a measure of the greenback against a basket of six major currencies, edged down to 82.116 from 82.126 late Wednesday. Read more on currencies.
A weaker dollar tends to support dollar-denominated prices for gold. However, early trading “could not accommodate both the weak jobless claims data simultaneously to the very weak inflation data,” said Hastings.
“The weak inflation data moved gold the most,” he said. “The disinflation risks to gold prices remains a threat to gold’s ability to regain the $1,620 area.”
Meanwhile, growing speculation of further monetary stimulus including from the Federal Reserve and the European Central Bank has spurred interest in gold in recent days. Gold futures prices has scored a gain of 2% over the past four trading sessions.
The metal is seen as a safe store of value and a hedge against a devaluation of the dollar, should the Fed implement more quantitative easing measures.
The broader metals complex were mostly lower, though platinum bucked the trend.
July platinum PLN2 +1.00% gained $10.30, or 0.7%, to $1,477.10 an ounce, while September palladium lost 45 cents , or 0.1%, to $622.85 an ounce. July copper HGN2 -0.12% shed 0.1% to $3.34 a pound.
Myra Saefong is a MarketWatch reporter based in San Francisco.
Virginia Harrison is a MarketWatch reporter based in Sydney.
