Gold futures were marginally softer early Thursday after ending the previous session at a two-month low, as a surging US dollar keeps pressure on the precious metal and other commodities.
Gold briefly ticked higher in choppy trade after data showed the US economy contracted in the first quarter.
Gold for June delivery GC00,
fell $5.60, or 0.3%, to $1,883.10 an ounce on Comex after ending Wednesday at its lowest since late February. May silver SIK22,
was down 47 cents, or 2%, at $23.035 an ounce.
The US economy shrank at a 1.4% annualized pace in the first quarter. But the decline mostly stemmed from a record international trade deficit, lower government spending and declining inventories, while robust consumer spending and businesses investment signaled the economy was still steadily expanding.
Gold, meanwhile, was still struggling with headwinds provided by the US dollar.
“The gold price has slid this morning to a 2-1/2-month low…because the US dollar has further appreciated,” said Daniel Briesemann, analyst at Commerzbank, in a note.
The ICE US Dollar Index DXY,
a measure of the currency against a basket of six major rivals, rose to a five-year high as the Japanese yen USDJPY,
plunged after the Bank of Japan pledged to buy unlimited amounts of 10-year fixed-rate Japanese Government Bonds to defend a 0.25% yield level. The euro EURUSD,
also remained under pressure, slipping below $1.05 for the first time in five years.
A stronger dollar makes it more expensive to users of other currencies to buy dollar-priced commodities.
Dollar domination continues, as yen slumps to two-decade low
Credit: www.marketwatch.com /