22-Apr (MarketWatch) — Gold futures were headed for back-to-back declines Friday but could salvage a weekly gain, while silver prices remain near their highest in about a year. Metals markets are consolidating late-week after a significant rise as traders contemplate what’s next for interest rates and their impact on holding nonyielding precious metals.
Financial markets assessed the European Central Bank’s decision to stand pat on its primary interest-rate tools and looked ahead to the U.S. Federal Reserve’s monetary policy meeting next week. Metals trading remains largely reliant on the latest moves for the dollar trading pairs, with a focus on eurodollar. A stronger dollar tends to put pressure on metals priced in that currency.
“The euro has given up all its gain against the dollar after the ECB’s decision. This is despite the fact that the ECB has shown no immediate need to add stimulus, which should boost the value of the euro,” said Naeem Aslam, chief market analyst with AvaTrade. “However, the trade hasn’t worked according to its logic and traders have decided to shave some profit this trade…the ECB president has said that the risk is still tilted towards the downside for global growth [and] the bank will continue to use its tools to combat this.”
PG View: With silver above $17, the downside in gold is likely to be quite limited.