Gold futures finished higher on Tuesday on the back of a retreat in the U.S. dollar, but the metal still suffered a decline for a third month in a row.
Gold also gained with some benchmark stock indexes trading lower on Wall Street as futures prices for the metal settled. Investors awaited the Federal Reserve’s policy statement due Wednesday. A private gauge of China factory activity weakened in April but still showed expansion, while a flurry of corporate earnings included less-than-stellar results for Google-parent Alphabet GOOGL, -7.50%
On Tuesday, gold for June delivery GCM9, -0.16% rose $4.20, or 0.3%, to settle at $1,285.70 an ounce, with the metal posting a loss of roughly 1% for the month. The most-active July silver SIN9, -0.26% contract added 5.1 cents, or 0.3%, to $14.984 an ounce, with the contract down roughly 1.4% for the month. Based on the most-active contracts, silver lost closer to 0.8% in April, according to FactSet data.
Moving inversely to gold, the ICE U.S. Dollar Index DXY, -0.03% which tracks the value of the buck against six of its trading rivals, was down 0.4% at 97.466 as U.S. inflation data recently came in below expectations.
Gold rebounded “as nimble traders have become used to buying dips and selling rallies lately” ahead of Fed meetings, said George Gero, managing director of RBC Wealth Management. Chinese data also came in weaker than expected, and there’s a “possible light at the end of the tunnel [given] negotiations on tariffs with China,” he said.
Policy makers are fully expected to leave interest rates on hold come Wednesday’s conclusion of the two-day meeting, but the statement and remarks by Fed Chairman Jerome Powell will be closely watched for clues to the central bank’s future plans, after the panel abruptly paused its plan for rate increases in January and stopped the wind-down of its balance sheet.
Read: Powell faces tough test Wednesday as market is uneasy with his recent communication
Against that backdrop, Gero expects gold to trade in the $1,275 to $1,300 range for now, “until we see more political and economic headlines and [U.S.] pre-election media coverage.”
On the economic front, data released Tuesday showed that the Chicago-area purchasing managers index fell sharply in April to 52.6, the lowest level since January 2017. Consumer confidence in April, however, bounced back to 129.2 from 124.2.
In trading among other metals, the most active July copper contract HGN9, +0.10% added 0.2% to $2.904 a pound, with the contract 1.2% lower for the month. July platinum PLN9, -0.20% fell 1.1% to $891.70 an ounce, but was 4.7% higher for the month, while June palladium PAM9, -0.74% settled at $1,382.70 an ounce, up 1.5% after Monday’s 5.9% drop. Palladium climbed nearly 2.9% for the month.
“Palladium prices in the short term may remain volatile and range bound as the market catches its breath, but the longer term outlook for palladium still remains positive due to structural supply deficits,” said Maxwell Gold, director of investment strategy at Aberdeen Standard Investments.
Among the exchange-traded funds, SPDR Gold Shares GLD, +0.31% added 0.3%, paring its month-to-date loss to 0.7%.
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