With gold prices being inversely correlated with market confidence, it’s not surprising that the price of the precious yellow metal fell in April as worries over a potential recession receded somewhat.
As previous fears fueled by weak Chinese data alongside feared technical indicators like an inverted yield curve died down amidst a further surging stock market, many even expected golds price to fall. Tuesday saw Gold futures rise slightly today as the U.S. dollar weakened, but still reported a third straight monthly loss.
Gold for June delivery rose around $4.2 or 0.3 percent, ending the day at $1,285.70 an ounce, corresponding to an approximate one percent loss for April. The precious metal is joined by another commodity, silver, whose July silver futures contracts also rising similarly today but still down 1.4 percent on the month.
Prices for the yellow metal rebounded today as traders have become used to buying and selling gold frequently, especially ahead of major macroeconomic events such as Fed meetings or tariff negotiations between Beijing and Washington.
In regard to the later, an agreement between the two countries has been moving along slowly, with a possible light at the end of the tunnel looming on the horizon. As for the former, policymakers are expected to continue to leave interest rates alone as Wednesday sees the conclusion of a two-day meeting as markets closely follow any remarks made by Fed Chairman Jerome Powell.
The general consensus among experts is that gold is expected to trade between $1,275 and $1,300 for now until new economic headlines emerge, whether that comes from central bankers, trade negotiations, new foreign economic data or even pre-election media coverage.
While there previously was an aura of extreme optimism surrounding gold with many expecting prices to surge well into the $1,400+ level, this was also at a time when palladium was surging to new heights never seen before.
When the prices for palladium came crashing back down again, gold’s respective rise in price, which previously was almost taken for granted, hasn’t seemed to come along.
While general investors might not be jumping on gold with as much excitement as before, the precious metal has found a slew of new buyers in the form of central banks.
Countries such as Russia, India, and China have all led the way in fueling gold demand as these nations seek to diversify themselves away from relying on the U.S. dollar.
While some regard this as a potential bearish sign going forward, others aren’t as worried and likely won’t ever be unless more politically aligned nations’ central banks, such as the Bank of England, Bank of Canada, or other western nations, begin buying up gold as well.
“We do not recommend establishing length at current levels on gold,” said Ed Meir, an analyst at International FC Stone as he pointed to a lack of potential upside price movers. “Although the dollar is not moving higher on the back of strong macro readings, it is not coming down either; neither are the US long-term rates.”
For the next couple of months at least, investing in gold seems like an uncertain thing.