Gold futures edged lower Friday, extending the yellow metal’s slide below $1,300 U.S. an ounce, while hopes for fresh economic stimulus in China and a continued U.S. economic recovery contributed to a further rebound by copper.
Gold futures for April delivery fell $6.50, or 0.5%, to $1,288.20 U.S. an ounce to trade at levels last seen six weeks ago. On a nearby futures basis, gold is on track for a quarterly rise of more than 7%.
May silver was down for a 10th straight session, shedding nearly two cents, or 0.1%, to $19.69 U.S. an ounce.
A stronger dollar contributed to the weaker tone for gold, as traders pay close attention to the Federal Reserve’s plans to scale back its bond-buying program and eventually move to normalize monetary policy. A stronger dollar is viewed as a negative factor for commodities priced in the currency because it makes those commodities more expensive in other currencies.
The dollar was slightly higher versus major rivals. The euro slipped to a three-week low versus the U.S. unit after data pointed to deflation in Spain.
May high-grade copper futures rose more than four cents, or 1.4%, to $3.0345 U.S. a pound. Copper was slammed earlier this month on fears of a Chinese slowdown but have claimed back some losses after remarks by Chinese Premier Li Kequiang were taken as a hint the government is ready to stimulate the economy if the slowdown worsens.
Although Chinese copper imports are likely to decelerate in coming months, the stocks of copper at the London Metal Exchange currently stand at two-year lows, they noted, driving the spot price of the metal above its forward price.
The main risk to the scenario is weaker growth in China and the danger of problems in China’s banking sector.
