Gold futures have finished lower on April 29 for a fourth consecutive session. The precious metal lost more ground in the wake of news that there is possible progress on an experimental treatment for COVID-19. This news dulled the haven demand for the yellow metal.
Nevertheless, prices edged higher after the official statement when the Federal Reserve announced that it has allocated efforts and stimulus packages to help the economy combat the severe effects of the coronavirus pandemic.
Gold for June delivery GCM20, -0.18% was trading at $1,716.80 on April 29 afternoon moments after the Federal Open Market Committee retained its benchmark interest rate in a range of 0 to 0.25%. In that meeting, the Committee said that it is ready to commit to utilizing multiple tools as the economy continues to encounter a spreading health crisis.
The US central bank has already exceeded its rescue effort in the aftermath of the 2008 financial crisis; to soften the blow of the pandemic. That pushed its balance sheet to a record of $6.6 trillion according to an official count from the past week. The prices for the June gold contract surged from the Comex settlement at $1,713.40 that had lost $8.80; or 0.5%, from April 28.
COVID-19 Effect on Gold
Commentators and commodity experts have been watching for a treatment or a vaccine for the deadly contagion that had the potential to undercut appetite for havens and support the hopes of mitigating the impact of the health crisis.
An official report indicated that Gilead Sciences’ experimental treatment for the illness acquired from the novel coronavirus strain got some success. The tests were done in a government-run clinical lab evaluating remdesivir in various COVID-19 patients.
In general, it is still a highly volatile time for gold. The global head of currency, strategy, and market research at FXTM, Jameel Ahmad, having:
“likened to an animated version of a game of tug of war. It seems that buyers and sellers are each canceling one another out.”
Based on the June contract, gold futures are trading at almost 1.4% lower for the week. Nevertheless, they are up over 7% a month to date. Ahmad added:
“There is still a case that gold should be performing even stronger than it is already doing when taking a look at the horrifying economic data releases that are coming out.”
On April 29, a first reading of the official performance of the US economic activity, GDP, lost 4.8% in the first quarter on an annualized basis. That summarizes the effects of the coronavirus pandemic so far for the year.
Gold has been majorly trading within a tight range recently. The bulls seemingly expect it to break out of the trend as the latest data underlines the hard slog ahead for the economies trying to re-emerge from the coronavirus-induced lockdowns. A senior market analyst at Oanda, Craig Erlam, said that:
“for now [gold] seems caught in two minds. $1,660 is the level to watch below and $1,750 above but the walls may be closing in.”
July silver SIN20, 0.89% has now become the most-active contract among the other Comex metals. It has shed 1.3 cents, or 0.08%, to settle April 29 at $15.315 an ounce; after a loss of below 0.1% in the previous session.
July copper HGN20, 1.19% hovered at around 1% to $2.3705 a pound. Also, the July platinum PLN20, 1.76% gained 0.5% to $799.60 an ounce; while the June palladium PAM20, +2.43% traded at $1,917.40 an ounce, up 2.1%.