GOLD SLIPS TO 10-WEEK LOWS

GOLD PRICES inched lower yesterday, hovering close to a 10-week trough touched earlier, as a robust dollar overshadowed jitters over contraction in US economic growth in the first quarter.

Spot gold was down 0.1 percent at $1 884.70 (about R29 927) at 4.57pm. It hit $1 871.81 an ounce, its lowest level since February 17 earlier in the session. US gold futures eased 0.2 percent to $1 885.20 an ounce.

“The gold prices were positive for a bit after the negative US GDP number that initially sparked some ideas that maybe the Federal Reserve (Fed) can’t be as aggressive on its monetary policy tightening,” said Kitco senior analyst Jim Wycoff.

“It has lately been more downside for gold as the US dollar index hits highs and bond yields rise ... The economy remains in pretty good shape and inflation needs to be brought under control.”

The US economy unexpectedly contracted in the first quarter amid a resurgence in Covid-19 cases and a drop in pandemic relief money from the government, while domestic demand remained strong. Meanwhile, weekly jobless claims dropped 5 000 to 180 000.

Gold has declined about 2.7 percent this month, which could be its biggest monthly fall since September, on expectations of an aggressive monetary policy tightening by the Fed and a stronger dollar. The dollar index rallied yesterday to its highest level since December 2002 amid widespread weakness in its major rivals.

“With the Fed seen hiking interest rate by 50 basis points and possibly 75 basis points in the next two meetings after the May 4, the dollar is going to remain in demand,” Fawad Razaqzada, market analyst at City Index, said.

In other metals, spot silver dropped 1.3 percent to $22.99 an ounce. Platinum slipped 0.5 percent to $913.25 and palladium gained 2.2 percent to $2 251.20 an ounce. I Reuters