Gold, Silver, Platinum & Copper Trading In Positive Territory

Gold continued in the green on Tuesday morning after making significant gains during Monday’s session. The US dollar eased giving gold bulls the opportunity to push up bullion prices. Gold is trading at 1240.50 adding an additional 30 cents in Asia. Silver added 56 points to 17.065 remaining near the top of its trading range as it continues to outperform its counterpart. Platinum dipped $3.05 after its rally pushed prices well above the $1000 price level. Traders sold off this morning to book profits with the metal shining at 1014.60. A lighter greenback helped gold extend gains this morning, with investors adjusting positions ahead of policy meetings this week at the Bank of Japan and the U.S. Federal Reserve.

Reuters reported that the Fed holds a policy meeting starting later in today’s session. The U.S. central bank is not expected to raise interest rates at the meeting, but markets will be looking for its take on the global economy and its monetary policy outlook. Economists expect the Fed to deliver a rate hike in June, and follow up with another by year-end. But interest rate futures show less conviction, underscoring an ongoing wide gap between markets and policymakers on the trajectory of rates.

Gold is highly sensitive to rising rates, which lift the opportunity cost of holding non-yielding assets such as bullion, while boosting the dollar.

Assets in SPDR Gold Trust, the largest gold-backed exchange-traded fund, fell 0.3 percent to 802.65 tonnes on Monday, though remained not too far off a two-year high reached earlier this year. Data on Friday showed that hedge funds and money managers raised their bullish position in COMEX silver contracts to a record high in the week to April 19, and net long positions in gold to the highest in 3-1/2 years.

Another Reuters report said that gold has gained about 16 percent this year on speculation that the Fed may not be able to raise rates this year on concerns over the Chinese economy and volatility in global markets.

Economists expect the Fed to deliver a rate hike in June, and follow up with another by the end of this year. But interest rate futures show less conviction, underscoring an ongoing wide gap between markets and policymakers on the trajectory of rates. Analysts warn gold could see more declines after Friday’s slide.

“Gold is in a corrective phase after recent gains. Each time it has rallied to $1,270-$1,282, it has fallen back on profit-taking, especially when the dollar has rallied,” said James Steel, analyst, HSBC.

The dollar rose to a three-week high against the yen on Friday after a report said the Bank of Japan is considering to expand its negative rate policy to bank loans. But it fell back slightly on Monday, with the dollar index down 0.2 percent. Speculators continue to bet on rising prices for gold and silver.

Not only were the precious metals trading in the green so were industrial and base metals with aluminum, zinc and copper pushing towards recent highs. Aluminum touched its highest in seven months last week and copper hit a four-week peak, partly on optimism about an economic rebound in top metals consumer China. Copper is trading at 2.256 this morning. But many analysts have warned that underlying supply-demand fundamentals do not justify the extent of the price gains.