Gold and the SPDR Gold Trust (ETF) (NYSEARCA:GLD) continued a downward trend in Asian and European trading on Friday, taking a hit from a stronger USD and growing appetite for oil. Favorable U.S. employment data lifted the greenback against a basket of trade-weighted major global currencies. Hope has also increased among investors that OPEC members could discuss possible production freeze at the June meeting.
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Oil talks recently broke off largely because of the supremacy war between the world’s largest oil exporter Saudi Arabia and follow OPEC member Iran.
Appetite for safe haven assets doused
In Asia and European trading hours, gold futures for June delivery were seen pulling back more than 0.30% to trade at about $1246.60 a troy ounce. The yellow metal fell nearly 0.33% to $1,250.30 an ounce in the previous session.
The pullback in gold is a sign that investors are willing to take on more risks in oil and equity markets. Investors typically pick up gold when the broader economic conditions are poor because the yellow metal is considered a safe haven asset.
The U.S. economy has recently shown signs of improvement, thus the exit from gold. In the week ending April 16, the Labor Department said initial jobless claims fell to a 4-decade low. The initial claims in the week under review declined 6,000 to 247,000, sharply down from 253,000 in the previous week. Economists had expected the initial unemployment claims would balloon 10,000 to 263,000 in the week ending April 16.
The favorable job data lifted investor hope of an improving U.S. economy and the dollar took a cue.
The USD/JPY (USDJPY) advanced 0.5% to 109.98 and the greenback also edged up 0.05% to 94.67 against a basket of six major global currencies.
A stronger dollar douses appetite for gold
A stronger dollar is bad for gold trade because the yellow metal becomes more expensive for foreign buyers.
Oil prices and iPath S&P GSCI Crude Oil Total Return (NYSEARCA:OIL) gained Asia trading on Friday amid hope that OPEC members would return to the table to discuss a production cut.
Other precious metals
Silver contracts for May delivery were see steady at about $17.090 a troy ounce. Copper contracts for May delivery were also steady at $2.252 a pound.
