Gold prices settled at a two-week low Thursday, giving up earlier gains in the wake of an abrupt end to the U.S.-North Korea denuclearization talks, with a stronger-than-expected reading on the U.S. economy contributing to the metal’s loss for the month.
U.S. President Donald Trump cut short a summit with North Korean leader Kim Jong Un after failing to reach an agreement on curbing North Korea’s nuclear-weapons program. The abrupt end to meeting in Hanoi helped to underpin some modest gains in bullion overnight.
But U.S. GDP, though slowing from the third quarter, grew at a 2.6% annual pace in the fourth quarter. Economists polled by MarketWatch had only forecast a 1.9% growth rate. The GDP number “was solid as a rock,” said Naeem Aslam, chief market analyst at ThinkMarkets UK. “There are no signs of slowing down and gold price eased off on the back of this.”
April gold GCJ9, -0.43% fell $5.10, or 0.4%, to settle at a two-week low of $1,316.10 an ounce. The bullion lost about 0.7% in February, based on the most-active contract, following four consecutive months of gains, FactSet data show.
Read: Why gold is down for the month, but still on a long-term track to reach $2,000 an ounce
Following the better-than-expected GDP number, Scotiabank Economics advised clients “to continue to downplay market pricing for [Federal Reserve interest] rate cuts.” In a note, it said its “forecast remains pointed toward a return to modest tightening later this year.” Higher rates can boost the dollar and make gold less competitive against interest-bearing investments.
U.S. benchmark stock indexes were modestly lower, but poised for a monthly gain, while the U.S. dollar, as measured by the ICE U.S. Dollar Index DXY, +0.08% was little changed for the session, but looking at a monthly rise of 0.6%. A stronger dollar usually weighs on demand for commodities pegged to the currency, making it relatively more expensive for buyers using other monetary units.
However, in a Thursday research note, Lukman Otunuga, research analyst at FXTM, said there were still reasons to be bullish on precious metals, citing unresolved issues between the U.S. and China on trade and “concerns over plateauing global growth among many other geopolitical risks straining investor confidence.”
Otunuga added: “it must be said that we’re not out of the woods just yet. Amid these developments, the fundamental questions remain; will the U.S. and China strike a new trade deal that mutually appeases the world’s two largest economies?”
Meanwhile, gold-backed exchange-traded fund SPDR Gold Shares GLD, -0.52% was down 0.5% for the session, as well as the month so far.
Among other metals, May silver SIK9, -0.77% fell 0.8% to $15.634 an ounce, with prices based on the most-active contracts losing about 2.7% for the month. May copper HGK9, -0.56% shed 0.5% to $2.948 a pound, with prices up 5.9% for month. June palladium PAM9, +1.51% gained 1.7% to $1,501.50 an ounce, for a most-active contract monthly gain of over 15%. April platinum PLJ9, +0.39% rose 0.6% to $875.20 an ounce, with prices adding 6.1% in February.
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