Gold futures finished lower Monday after upbeat readings on economic activity in China and the U.S. helped to momentarily soothe some worries over global growth, providing a lift to equity markets and a drag on assets perceived as havens.
Gold for June delivery GCM9, -0.43% the most active contract, fell $4.30, or 0.3%, to $1,294.20 an ounce. May silver SIK9, -0.23% was off 1.1 cents, or less than 0.1%, to settle at $15.099 an ounce.
Gold ended last week under pressure, falling back below the $1,300-an-ounce level. On a most-active basis gold ended the quarter with a gain of around 1.1% but well off its February high near $1,348 an ounce.
U.S. stock indexes rose sharply on Monday, joining a global rally following a rise in the Caixin China manufacturing purchasing managers index to 50.8 in March from 49.9 in February. That was the first reading above 50 — signaling an expansion in activity — in four months.
On top of that, the Institute for Supply Management’s manufacturing index showed that activity in the U.S. accelerated, coming in at a stronger-than-expected 55.3 in March versus a two-year low of 54.2% a month earlier.
Demand for stocks, reflected in the rally in the Dow Jones Industrial Average DJIA, +1.16% and the S&P 500 index SPX, +1.05% signaled waning appetite for assets considered safe bet, like gold. Some buoyancy in yields, which move inversely to bond prices, also hurt buying of precious metals. Rising yields of government bonds can make bullion, which doesn’t bear a yield, comparatively less attractive. The 10-year Treasury note yield TMUBMUSD10Y, +3.84% was at 2.50%, compared against 2.41 on Friday.
Gold’s downtrend comes as the U.S. dollar, a key catalyst for commodity moves, was little changed. The ICE U.S. Dollar Index DXY, +0.03% a measure of the buck against a half-dozen currencies, was up less than 0.1% at 97.289.
“Gold prices are softer on the day, despite a falling dollar as investors focus on the rebound with global bond yields. The precious metal in 2019 has seen most of its gains capped on China-US trade deal optimism,” wrote Edward Moya, market analyst at Oanda, in a Monday research note, referring to the long-running trade spat between Beijing and Washington that investors view as nearing a point of resolution.
“Continued upside surprises with Chinese data and progressive trade talks continue to prevent gold from breaking out higher,” he wrote.
Commitments of traders data from the Commodity Futures Trading Commission indicated speculative traders got caught on the wrong side of the market after nearly doubling their net long futures positions to 58,000 contracts in the week to March 26, wrote analysts at Commerzbank, noting the price has fallen consistently meanwhile.
In other metals trading, June palladium PAM9, +3.92% rose $50, or 3.7%, to settle at $1,391.80 an ounce, marking the sharpest daily for a most-active contract since Aug. 18, 2018, according to FactSet data. Palladium is a key industrial metal, with growing need for catalytic converters in the auto-market driving recent appetite for the commodity. The metal’s prices have been volatile trade in the past several sessions after palladium carved out a series of all-time highs.