Gold prices inch lower as the U.S. stock market moves higher

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Gold futures inched lower Monday, with a rise in the U.S. stock market undercutting some appetite for the haven metal after a report on Good Friday showed a seasonally adjusted 916,000 jobs added in March, marking the best gain since August.

Overall, “gold prices are in ‘no man’s land’ as investors await to see if the bond market selloff returns and sends the dollar higher,” said Edward Moya, senior market analyst at Oanda. “This is a tough Monday for gold trading as Europe remains on vacation and Treasury yields look stable.”

“The aftermath of the robust nonfarm payroll report is dampening demand for safe-havens, but could be raising some eyebrows about future inflation down the road,” he said in a market update. “Gold’s bottom appears to be in place but that will only be confirmed once everyone returns” from the Easter holiday” on Tuesday.

Moya added that traders will keep a close eye on the minutes from the Federal Reserve’s meeting due Wednesday that “could show if they were thinking about rolling back aid,” he said.

The most-active June gold contract GCM21, +0.19% GC00, +0.19% was down $1, or 0.06%, to trade at $1,727.40 an ounce on Comex. Prices gained nearly 0.8% on Thursday, but lost roughly 0.2% for the holiday-shortened week. On Wednesday, gold posted a monthly loss of 0.8%.

Gold prices briefly turned positive after a record ISM Service index reading “showed prices paid for materials surged to the highest since July 2008, said Moya.  

A survey of business leaders at service-oriented firms such as banks, retailers and restaurants jumped to 63.7% last month from 55.3% in February, the Institute for Supply Management said Monday. That’s the highest level on record since the ISM began the survey in 1997.

Separately, the Commerce Department reported that U.S. factory orders fell 0.8% in February — the first decline in 10 months.

Markets in Europe are closed in observance of Easter Monday and U.S. markets, which had been closed for Good Friday, moved higher in reaction to Friday’s jobs report, limiting any price gains for haven gold.

Michael Armbruster, managing partner at Altavest, said gold prices “will be mostly driven by the direction of real and nominal long-term Treasury yields.” 

“Yields are driven by inflation and inflation data is likely to spike in the months ahead,” he told MarketWatch. “In the short to intermediate run, we think gold has the potential to slide below $1,600.”

Prices for the yellow metal have struggled to move above key price averages, also suggesting the likelihood for further declines.

“The price is still struggling to move above the 50, 100 and 200-day simple moving averages on the daily time frame,” wrote Naeem Aslam, chief market analyst at AvaTrade, in a daily note.

“As long as the price continues to fail to break above the 50-day SMA on the daily time frame, the likely chances are that gold price will continue to move lower and we will not see any bullish price trend,” he wrote. FactSet data show the 50-day moving average at $1,771.87.

Meanwhile, May silver SIK21, -0.31% SI00, -0.31% was up 0.2% at $25 an ounce on Monday.

May copper HGK21, +3.98% tacked on 3% to $4.11 a pound. July platinum PLN21, +0.31% added 0.7% to $1,217.80 an ounce and June palladium PAM21, +0.23% edged up by 0.4% to $2,667 an ounce.

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