With modest gains for the week and month, gold futures end just below $2,000

It ended the week and the month of April higher for gold futures on Friday, with the metal falling below $2,000 an ounce after gaining a few cents during the session to end the week and the month higher than it began.

‍

The outlook for the economy and the future move of interest rates by the Federal Reserve were continued to be assessed by investors, along with the latest developments in the banking industry.

‍

The price action

• Gold futures for June delivery GC00, -0.04% GCM23, -0.04% settled at $1,999.10 per ounce on Comex after rising by 10 cents, or 0.01%. As reported by Dow Jones Market Data for the most active contract, prices for the week settled 0.4% higher than a month ago, while their month-ending price surged by almost 0.7%.

‍

• It rose two cents, or nearly 0.1 percent, to $25.23 an ounce on Wednesday as silver futures for July delivery SI00, +0.42% moved up 1.3% for the week, and 4.4% up for the month, with prices climbing by 0.7% for the week and 4.4% for the month.

‍

• For June, palladium, PAM23, +0.27%, added $17.50, or 1.2%, to $1,509.90 per ounce, for a monthly gain of almost 2.9%, whereas platinum lost $3.10, or 0.3%, to $1,090.10 per ounce, for a monthly gain of 8.7%. For July, platinum PLN23, -0.52%, was down $3.10, or 0.3%, to $1,090.50 per ounce, for a monthly

‍

• A penny or 0.2% has been added to the copper price in July (HGN23, +0.32%) following April's 5% drop to $3.89 per pound.

‍

The market's drivers

FXTM's Lukman Otunuga, manager of market analysis, said that gold needs to experience a more intense fundamental rally to observe a breakout.

‍

According to TradeAlgo, despite a wide range of prices between $1,969 and $2,015, the price is still trapped between $2,000 and $3,000. He explained that this psychological level is at the center of the market.

‍

At next week's Federal Reserve policy meeting, traders will be looking for more clues to determine whether the Fed will be able to keep raising interest rates in the near future.

‍

It is evident that we are still in the midst of a choppy trading environment across many assets because the financial markets are in a waiting and seeing mode over a number of different themes," Jameel Ahmad, chief analyst at CompareBroker.io, said.

‍

In the weeks leading up to the Fed's policy meeting next week, it is expected that investors will be asking for more clarity on where U.S. interest rate expectations are coming from as a way to gauge the direction they are headed."

‍

Against this backdrop, the ICE U.S. Dollar Index (DXY) jumped by 0.1% to 101.61, a measure of the strength of the U.S.-based currency compared to a basket of rival currencies, weighing on gold prices denominated in dollars.

‍

In the near term, gold is likely to be driven by U.S. dollar trends and emerging market buying as interest rates remain range bound and equity markets remain in the same place, said Rob Haworth, a senior investment strategist at U.S. Bank Asset Management. In spite of this, he said that recession fears are still keeping gold prices afloat, especially since inflation remains stubbornly high.

‍

As the month unfolded, Ahmad stated to TradeAlgo in response to a question about gold's relatively modest move higher for the month. He said that lower volatility was being seen as a consolidation after it rose nearly 10% in the first month of next year.

‍

Traders are acutely aware of the fact that $2,000 is a key psychological handle for the precious metal, and as such, the reason that the price action so far has been moderate can also be attributed to the technical analysis side, he maintained.

‍

Nevertheless, Ahmad says he remains optimistic about gold as a medium- or long-term asset over the coming years.

‍

It is still a matter of concern that banking stress appears to be a confidence issue rather than a wider threat of global contagion, even though it is more of a confidence issue than a wider threat of global contagion. According to him, “Thursday’s GDP miss has proven once again that the Fed has moved the button on higher interest rates as far down as it could following its upcoming rate hike, which [is] widely expected next month,”

‍

It should be evident to all that once the Fed releases that button that it is just a matter of time before the focus shifts back to the Fed pushing the button in the other direction in terms of cutting rates again as soon as it has been released,” Ahmad said. I believe that from a fundamental point of view, this is a clear bullish sign.

‍