Thin physical demand and dashed hopes in the U.K. contribute to fall
By Claudia Assis, MarketWatch
SAN FRANCISCO (MarketWatch) — Gold declined Tuesday, tracking losses in the broader market on disappointment with recent U.S. earnings and as the dollar traded higher than most of its currency rivals, pressuring the metal.
Lack of physical demand for gold, particularly in India, and dashed hopes of more quantitative easing in the U.K. also conspired to keep prices lower.
Gold for June delivery GCM2 -0.20% declined $5.90, or 0.4%, to $1,645.10 an ounce on the New York Mercantile Exchange.
The metal on Tuesday inched higher, capping a choppy session where it struggled to find a firm direction.
Gold lately has tracked U.S. equities and other commodities such as oil, as the dollar and U.S. bonds have been the only asset classes able to attract significant safe-haven flows.
Gold is suffering from “lack of interest from physical players or investors,” analysts at VTB Capital in London said in a note to clients.
“At the same time, the downside remains limited and clearly not many are willing to liquidate their longs just yet after volatile futures and options players took heavy profits in March and at the start of the April,” they added.
The broader suite of metals futures was mixed, with platinum and palladium trading higher.
U.S. stocks opened lower after investors were disappointed at earnings reported by technology heavyweights such as Intel Corp. INTC -1.67% and International Business Machines Corp. IBM -2.20% Read more on stocks.
The dollar index DXY +0.05% , which compares the U.S. unit with a basket of six currencies, traded at 79.676, up from 79.561 in late North American trading on Tuesday. Read more on currencies.
The dollar declined versus the British pound, however, after members of the Bank of England’s monetary policy committee voted 8-1 to hold the size of its asset-purchase program.
One of the supporters of increasing the program, the centerpiece of the bank’s quantitative-easing strategy, voted with the majority this time.
A higher dollar is detrimental to dollar-denominated gold and other commodities, as it makes them more expensive for holders of other currencies.
Meanwhile, some analysts continue to have concern about physical demand in India, a top consumer of gold. High imports of the metal have expanded India’s current account deficit, analysts at Commerzbank said in a note.
“That said, demand could soon pick up again noticeably, as next week will see one of the highest Hindu festivals,” they said. “According to industry sources, high sales of gold are expected, partly because demand has built up as a result of the strike.”
Import duties on gold have been increased, which resulted in a three-week strike by Indian jewellers protesting the decision.
Silver tracked gold down, with the May contract SIK2 -0.31% off 9 cents, or 0.3%, to $31.58 an ounce. Copper for the same month’s delivery HGK2 -0.44% retreated 2 cents, or 0.5%, to $3.63 per pound.
July platinum PLN2 +0.19% gained 80 cents, or 0.1%, to $1,585.50 an ounce, while sister metal palladium, for June delivery PAM2 +0.38% , added 75 cents, or 0.1%, to $662.70 an ounce.
Claudia Assis is a San Francisco-based reporter for MarketWatch.
