Gold futures fall 7.8% in April; worst month since late 2011
Economic data and Fed, ECB decisions this week offer demand hints
By Myra P. Saefong and Barbara Kollmeyer, MarketWatch
SAN FRANCISCO (MarketWatch) — Gold futures gained on Tuesday, buoyed by
expectations that the U.S. Federal Reserve will stick to its easy
monetary policy, but they still logged the worst monthly performance
since late 2011.
For the session, investors looked reluctant to move prices much in
either direction ahead of monetary-policy decisions this week by the Fed
and European Central Bank.
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Gold for June delivery
GCM3
+0.25%
climbed $4.70, or 0.3%, to settle at $1,472.10 an ounce on the Comex division of the New York Mercantile Exchange.
But gold prices dropped 7.8% for the month, the sharpest monthly decline
since December 2011 when futures tumbled 10.5%. The most-active futures
contract closed at $1,595.70 on the last trading day in March.
“Now that the month is over, we can finally look at the gold phenomenon
historically,” said Richard Hastings, macro strategist at Global Hunter
Securities, referring to the hefty selloff in the market in the first
half of the month.
The good news is that the gold price decline for the month was less than
that seen in December 2011 — and “nothing compared to the disaster in
October 2008,” when gold collapsed by roughly 18%, he said.
July silver
SIN3
+0.54%
closed at $24.19 an ounce, up 2 cents, or 0.1%. Prices were down 15% in April, based on the most-active contracts.
Gold looked rangebound on Tuesday, which isn’t unusual just before key
monetary policy meetings, said Ben Traynor, chief economist at
BullionVault.
The Fed meets this week
and will release its policy statement at 2 p.m. Wednesday. The European
Central Bank’s monetary policy decision is due Thursday.
Data deluge
Ahead of those decisions, the market looked to Tuesday’s U.S. data, which offered a mixed economic view.
Chicago PMI slumped to a 3½-year low of 49.0 in April, down from 52.4 in March. The reading indicates contraction.
The slump in Chicago PMI “suggests that there will not be any change in
Federal Reserve monetary policy,” said Chintan Karnani, an independent
bullion analyst at New Delhi.
The central bank’s so-called quantitative easing program has helped
support gold, as the bond buying tends to pressure the dollar and can
lead to inflation. Gold is often seen as a hedge against inflation.
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