Gold Prices Fall Due to Consolidation

With recent weakness in the US dollar, as well as a healthy dose of geopolitical uncertainty, gold has demonstrated its wealth preservation role in a "risk off" environment.

World stocks as measured by the MSCI world equity index rose 0.3 percent. "We see the yen continuing to strengthen, and a strong yen and strong gold have gone hand in hand since November", Saxo Bank's head of commodity strategy Ole Hansen said.

The Atlanta and New York Federal Reserve banks downgraded their outlook for USA economic growth for the first quarter after disappointing data on retail sales and consumer prices in March.

Spot silver dropped 0.2% to US$18.21 per ounce.

The dollar fell to a five-month low against the safe-haven yen, while the USA dollar index was down 0.4 percent.

Gold closed higher in futures market on Tuesday, as investors piled into safe haven assets amid continued uncertainty surrounding the outcome of the French Elections and rising geopolitical tensions in North Korea, Russia and Syria. Regional tensions have risen over the past weeks as U.S. President Donald Trump has taken a tough rhetorical line with Pyongyang.

US bond prices were mostly flat.

However, Monday afternoon the dollar and yields picked up as did risk sentiment, following an interview with the U.S. Secretary of Treasury, Steven Mnuchin, published by The Financial Times.

Futures traders are pricing in around a 40% chance of a hike at the Fed's June meeting, according to Investing.com's Fed Rate Monitor Tool, down from around 60% last week.

A run of disappointing U.S. economic data and doubts the Trump administration will progress with tax cuts have quelled expectations of faster inflation. It touched its highest since November 11 at $18.65 on Monday.

Ahead of the first round of voting on April 23, the race looked tighter.

Trump's national security adviser said on Sunday that the United States, its allies and China are working together on a range of responses to North Korea.

The Turkish lira jumped about 2.5 percent to 3.6300 per dollar versus 3.7220 on Friday after President Tayyip Erdogan snatched a victory in a referendum to grant him sweeping powers in the biggest overhaul of modern Turkish politics.

  • Anthony Vega