Gold futures flipped between small gains and losses Thursday after ending the previous session at a two-month low, as a surging U.S. dollar keeps pressure on the precious metal and other commodities.
Gold for June delivery GC00, -0.03% GCM22, -0.03% fell 30 cents, or less than 0.1%, to $1,88.40 an ounce on Comex after ending Wednesday at its lowest since late February. May silver SIK22, -1.79% was down 40 cents, or 1.7%, at $23.105 an ounce.
Gold was still struggling with headwinds provided by the U.S. dollar.
“The gold price has slid this morning to a 2-1/2-month low…because the U.S. dollar has further appreciated,” said Daniel Briesemann, analyst at Commerzbank, in a note.
The ICE U.S. Dollar Index DXY, +0.70%, a measure of the currency against a basket of six major rivals, rose to a five-year high as the Japanese yen USDJPY, +1.95% 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, -0.53% 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.
Gold found some support after data showed the U.S. economy contracted in the first quarter, with the dollar coming off is highs versus major rivals.
The U.S. 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.
The World Gold Council on Thursday said gold demand in the first quarter was up 34% compared with the same period last year, driven by strong ETF inflows. While the gold price in U.S. dollars rose 8% over the quarter, demand, excluding over-the-counter activity, rose to 1,234 tons, the highest since the fourth-quarter of 2018 and 19% above the five-year average of 1,039 tons, the council said in a quarterly report.
In other metals trade, July copper HGN22, -1.62% fell 1.1% to $4.428 a pound.