Gold turns negative as dollar strengthens; focus on U.S. GDP data

PUBLISHED: Thu, 29 Apr 2021 11:10:49 GMT
Shreyansi Singh and Swati Verma
Key Points
  • Biden unveils plans for $1.8 trillion stimulus package
  • U.S. Fed keeps interest rates, bond-buying programme unchanged
  • U.S. Q1 GDP data due at 1230 GMT
  • Palladium deficit expected to widen this year-Capital Economics

April 29 (Reuters) – Gold prices reversed course to trade lower on Thursday as the dollar firmed, with investors awaiting U.S. GDP data for more cues after the Federal Reserve acknowledged a brighter economic outlook though it stood pat on its dovish policy stance.

Spot gold was down 0.1% at $1,780.10 per ounce by 0803 GMT. U.S. gold futures rose 0.4% to $1,780.50 per ounce.

“The fact that the Fed was optimistic about the economic recovery means that gold will find it difficult to break higher immediately. In the United States, the economic momentum has also meant that yields have an upward bias, which will keep gold capped,” said Harshal Barot, a senior research consultant for South Asia at Metals Focus.

Gold prices closed higher on Wednesday after the Fed decided to keep interest rates low and said it was too early to consider rolling back its emergency support.

U.S. President Joe Biden also unveiled a sweeping $1.8 trillion package plan for families and education in his first speech to Congress.

“The gold market lacks confidence. Having reached $1,790 overnight and once again failed to challenge $1,800, the conviction among traders remains low,” said Saxo Bank analyst Ole Hansen.

“The market keeps a close eye on correlation to other markets and with a slightly stronger dollar and real yields moving higher, profit-taking and selling emerged.”

Elsewhere, auto-catalyst metal palladium rose 0.7% to $2,948.43 per ounce, having scaled an all-time peak of $2,962.50 on Tuesday.

“Investment demand for palladium is minimal and… we expect it to benefit more than platinum from a rebound in autocatalyst demand as it is used primarily in gasoline vehicles,” Capital Economics wrote in a note.

Combining this with supply disruptions from the two mines in Russia, the palladium deficit is expected to widen this year and help prices reach $3,000 per ounce, it added.

Platinum was steady at $1,219.01 while silver gained 0.8% to $26.37 per ounce.

(Reporting by Shreyansi Singh and Swati Verma in Bengaluru; Editing by Krishna Chandra Eluri, Subhranshu Sahu and Sherry Jacob-Phillips)

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