•Gold on Thursday fell to its lowest in a little over one week, after comments from U.S. Federal Reserve Chairman Jerome Powell dashed hopes of a near-term rate cut, boosting the dollar and treasury yields.
Spot gold shed 0.3 percent to $1,272.01 per ounce as of 0610 GMT, having fallen to $1,270.76, its lowest since April 24, earlier in the session.
U.S. gold futures fell 0.9 percent to $1,273.20 an ounce.
•The Fed held interest rates steady on Wednesday, but emphasized on the rhetoric that it does not see a readjustment of rates in the near term.
“We know that the Fed is going to be on pause for a while, but the market was pricing in a more dovish lean towards the end of 2019,” said Stephen Innes, head of trading and market strategy, SPI Asset Management.
Powell’s view on inflation revived an ailing dollar on Wednesday and also prompted U.S. Treasury yields higher.
“There is a little bit of ambiguity around (Fed Chairman Jerome Powell’s) inflation language in particular. He sounded almost like Janet Yellen back in 2016 when he said that inflation risk could be transitory ... So that really means the Fed is probably going to be stuck in neutral,” Innes added.
•Meanwhile, Asian shares also adopted a wait-and-watch approach with major centres Japan and China shut for holidays.
•“Robust U.S. economic releases have eased global growth concerns as equity markets rally above 2018 highs. Strong risk appetites remain a bane for the precious metal,” Benjamin Lu, analyst, Phillip Futures, said in a note.
•Investors now closely monitor developments in the U.S.-China trade front with wide expectations that a deal to end a long-draw spat between the two countries could soon be realized, which may further boost risk appetite, thereby weighing on safe-haven gold.
Politico reported that the two countries are nearing a trade deal that would roll back a portion of the $250 billion in U.S. tariffs on Chinese goods.
•First-quarter gold purchases by central banks, led by Russia and China, were the highest in six years as countries diversify their assets away from the U.S. dollar.
Global gold reserves rose 145.5 tons in the first quarter, a 68 percent increase from a year earlier, the World Gold Council said Thursday in a report. Russia remains the largest buyer as the nation reduces its U.S. Treasury holdings as part of a de-dollarization drive.
“We’ve seen a continuation of the strong demand from central banks,” said Alistair Hewitt, head of market intelligence at the World Gold Council. “We’re expecting another good year for central bank purchases, although I’ll be pleasantly surprised if they are to match the level seen in 2018.”
As well as regular buyers such as Kazakhstan and Turkey, the first quarter also saw Ecuador adding to its reserves for the first time since 2014, plus sizable purchases by Qatar and Colombia, the council said. The buyers are dominated by countries looking to reduce their dollar dependency, and are typically nations with a lower share of reserves in gold than Western European countries.
Central bank purchases have been a key support for gold, helping to offset lower demand from bar and coin investors as well as from industrial users of the metal. Gold has climbed almost 8 percent since the end of September, and was trading at about $1,282 an ounce in London on Wednesday.
•Price is currently moving downwards, making a series of impulses, corrections and continuations. Therefore, bear flag patterns are written all over Gold's wall. I will expect to take a short position once prices breakout of the bear flag pattern and target the 1270 price level.
If prices can break below the 1280 level and push to the downside, it could be a good indication of bearish momentum. As always, let the market reveal its hand and wait for a collapse below entering any short positions. This is because market makers will be looking to trap breakout traders (particularly those waiting to place a short position). Otherwise, only market wizards can forecast the market direction.
•Elsewhere, silver fell 0.2 percent to $14.64 an ounce, holding close to a more than four-month trough of $14.57 from Wednesday, while platinum prices fell 0.2 percent to $862.15, having touched $853, its lowest in nearly a month, earlier in the session.
Palladium slipped 0.8 percent to $1,344.15, having touched its lowest level since Jan. 25 at $1,309.67 in the previous session.
Reference : Reuters, Trading View
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