Gold Prices Firm as Traders Balance Risks
Investing.com - Gold prices were little changed on Thursday as investors awaited the outcome of geopolitical risks and looked forward to key decisions on monetary policy to be delivered next week.
At 10:28AM ET (14:28GMT), gold futures for August delivery on the Comex division of the New York Mercantile Exchange inched up 80 cents, or 0.06%, to $1,302.20 a troy ounce.
In the short-term, market participants were focused on the G7 meeting to take place on Friday and Saturday in Quebec. France and Germany warned the U.S. that they would not sign a joint communique without concessions, but the American top economic adviser Larry Kudlow warned this week that U.S. President Donald Trump would not back down from his tough stance on trade.
Kudlow called the current situation a “family quarrel” and Trump was expected to have one-on-one meetings with the leaders of Canada, France and Japan on the sidelines of the G7 conference.
Traders will also keep a close eye on the upcoming June 12 summit between Trump and Korean leader Kim Jong Un in Singapore. The pulse of geopolitical tensions between the two could have a direct impact on the safe haven precious medal.
Also next week, market participants will closely follow monetary policy decisions by both the Federal Reserve and the European Central Bank.
The Fed is widely expected to raise interest rates by 25 basis points and investors will be watching to see whether policymakers project one or two further hikes this year.
Higher interest rates tend to weigh on demand for gold, which doesn’t bear interest, in favor of yield-bearing investments.
Close attention will also be paid to the ECB meeting. While markets expect no action at next week’s meeting, ECB chief economist Peter Praet said Wednesday that officials are increasingly confident that inflation is rising back towards the bank’s target and will debate whether to begin gradually scaling back its asset purchase program.
The remarks have helped bolster the euro to a three-week high against the dollar. The corresponding weakness in the U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, has helped support gold prices as the precious metal becomes more affordable to holders of foreign currencies.
In other metals trading, silver futures gained 1.1% at $16.875 a troy ounce by 10:29AM ET (14:29GMT).
Palladium futures rose 0.3% to $1,017.70 an ounce, while sister metal platinum lost 0.4% at $904.00.
In base metals, copper traded up 1.4% to $3.307 a pound.
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