Metals Stocks: Gold prices post a fourth straight decline, then edge higher after Fed policy statement

Metals Stocks


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Gold futures finished lower Wednesday for a fourth straight session, with possible progress on an experimental treatment for COVID-19 dulling haven demand for the precious metal.

Prices then edged higher after the official settlement when the Federal Reserve pledged to help the economy fight the devastating impact of the coronavirus pandemic.

Gold for June delivery
GCM20,
+0.99%

was at $1,716.80 in trading Wednesday afternoon shortly after the Federal Open Market Committee kept its benchmark interest rate in a range of 0 to 0.25% and said it will commit to using a full range of tools as the economy continues to face a public-health crisis.

The central bank has already exceeded its rescue effort in the 2008 financial crisis to soften the blow of the pandemic, pushing its balance sheet to a record $6.6 trillion as of last week’s count.

Prices for June gold contract were up from the Comex settlement at $1,713.40, which was down $8.80, or 0.5%, from Tuesday.

Commodity experts have been watching for a treatment or a vaccine for the deadly contagion which could undercut appetite for havens and support hopes of mitigating the impact of the virus.

A report indicating that Gilead Sciences’s experimental treatment for the illness derived from the novel strain of coronavirus achieved some success in a government-run clinical trial evaluating remdesivir in certain COVID-19 patients.

Overall, it’s still a volatile time for gold, with trading in the metal “likened to an animated version of a game of tug of war,” said Jameel Ahmad, global head of currency, strategy and market research at FXTM. “It seems that buyers and sellers are each cancelling one another out.”

Gold futures, based on the June contract, trade about 1.4% lower for the week, but were up more than 7% month to date.

“There is still a case that gold should be performing even stronger than it is already doing when taking a look at the horrifying economic data releases that are coming out,” Ahmad told MarketWatch.

On Wednesday, a first reading of the official scorecard of U.S. economic activity, gross domestic product, fell 4.8% in the first quarter on an annualized basis, highlighting the effects of the coronavirus pandemic so far.

Gold has been mostly trading in a range recently, with gold bulls expecting it to possibly break out of that trend as data underlines the hard slog ahead for economies attempting to re-emerge from coronavirus-induced shutdowns.

Craig Erlam, senior market analyst at Oanda, said that “for now [gold] seems caught in two minds. $1,660 is the level to watch below and $1,750 above but the walls may be closing in,” he said.

Among other Comex metals, July silver
SIN20,
+1.53%
,
which is now the most-active contract, shed 1.3 cents, or 0.08%, to settle Wednesday at $15.315 an ounce, following a drop of less than 0.1% in the previous session.

July copper
HGN20,
+0.25%

tacked on 1% to $2.3705 a pound. July platinum
PLN20,
+1.22%

rose 0.5% to $799.60 an ounce and June palladium
PAM20,
+0.24%

traded at $1,917.40 an ounce, up 2.1%.

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