Metals Stocks: Gold down a third session, but ends off session low amid a record drop in April U.S. consumer confidence

Metals Stocks


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Gold futures posted a third straight session decline on Tuesday, but finished off the session’s worst levels after data revealed that U.S. consumer confidence suffered a record drop in April.

The confidence Americans have in the economy experienced the biggest plunge in April in modern times as the coronavirus ravaged Main Street and Wall Street, according to the Conference Board. The consumer confidence index sank this month to 86.9 points from a revised 118.8 in March, a bit worse than economists polled by MarketWatch expected. That’s the lowest level since 2014.

“The report is weighing on optimism that the global economy would swiftly recover after being effectively closed for weeks due to COVID-19 containment measures in effect across much of the globe,” said Tyler Richey, co-editor at Sevens Report Research, adding that the news helped gold bounce off its earlier lows.

Gold for June delivery
GCM20,
-0.05%

on Comex lost $1.60, or 0.09%, to settle at $1,722.20 following a low at $1.704.10 an ounce. July silver
SIN20,
+0.01%

which is now the most-active contract, lost 1.3 cents, or 0.08%, at $15.328 an ounce.

U.S. benchmark stock indexes were trading on a mixed note Tuesday as gold futures settled. The Dow Jones Industrial Average
DJIA,
-0.13%

was up 0.6%, but the Nasdaq Composite
COMP,
-1.40%

fell 0.5%. An earlier rise in the stock market had been attributed to moves by European countries and some U.S. states to begin easing coronavirus lockdowns of business activity.

“The precious metal had surged to seven-year highs only two weeks ago as fears of economic catastrophe from a prolonged period of shutdowns were heightened. But with the number of new virus cases appearing to have peaked in most of Europe and possibly in the United States as well, many jurisdictions are now moving towards removing some of the restrictions put in place to slow the spread of the virus, allowing some small businesses and factories to open their doors for the first time in weeks,” wrote analysts at XM, in a note.

Meanwhile, gold is digesting news that more mining companies have indicated that they will restart production in May, said James Hatzigiannis, chief market strategist at Ploutus Capital Advisors.

Investors are also looking ahead to monetary policy statements from the U.S. Federal Open Market Committee on Wednesday and the European Central Bank on Thursday.

Hatzigiannis expects the Fed’s statement Wednesday and the question and answer session with the central bank’s Chairman Jerome Powell to affect gold prices. The market will be eager to hear if Powell “is as confident in a [second] half rebound and any indication of cutting interest rates to negative,” though Hatzigiannis does not foresee that happening at the meeting.

The Fed has “been quiet recently and obviously have tremendous influence on the effect on the dollar and as a result, will affect gold,” he told MarketWatch.

In other Comex trading, July copper
HGN20,
-0.21%
,
which is now the most active contract, ended little changed, up 0.02% to $2.3455 a pound. July
PLN20,
-0.25%

rose 2.4% to $795.60 an ounce and June palladium
PAM20,
+0.64%

lost nearly 0.9% to $1,878.70 an ounce.

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