Gold Settles at Nearly 4-Week Low on Stronger Dollar
24 March 2016 - 6:20AM
Dow Jones News
By Katherine Dunn and Mike Cherney
Gold futures fell Wednesday to the lowest levels in nearly four
weeks, dragged down by a stronger dollar despite safe-haven buying
that followed the terror attacks in Brussels on Tuesday.
Gold for April delivery, the most actively traded contract,
settled down 2% to $1,224 a troy ounce, according to CME Group Inc.
Front-month gold futures have been down for 10 of the past 13
trading sessions and are the lowest since Feb. 26.
Some analysts attributed the decline Wednesday to recent
comments by Federal Reserve officials, who suggested the central
bank could still raise benchmark interest rates despite keeping
them steady in March.
Higher rates would boost the dollar and make gold more expensive
for investors who hold other currencies, pushing the price down.
The WSJ Dollar Index, which measures the greenback against a basket
of other currencies, was up 0.5% on Wednesday.
Gold futures are still up 15% on the year, according to FactSet,
reflecting demand for safety earlier in the year as riskier assets
were roiled by fears of a recession.
With little fundamental news ahead of the Easter holiday, the
market has slowed for now.
"With the long weekend looming and the market overly long, this
[drop] is a perfectly understandable and somewhat overdue move, as
we see profit-taking and book squaring ahead of Easter," said David
Govett, head of precious metals at Marex Spectron, a global
commodities broker.
Following a series of explosions in Brussels, gold prices rose
more than 0.7% Tuesday morning, alongside other safe-haven assets,
including the dollar and government debt. At the time, Mr. Govett
said the rise was exaggerated and unlikely to be sustained.
But by the end of the day, the metal had pared its gains as the
dollar continued to strengthen, and gold futures settled up just
0.4%.
Market reactions to terror attacks tend to be short-lived. Gold
rallied on the first day of trading after the Paris attacks in
November, but by the end of the day, the metal had closed slightly
down.
Write to Katherine Dunn at Katherine.Dunn@wsj.com and Mike
Cherney at mike.cherney@wsj.com
(END) Dow Jones Newswires
March 23, 2016 15:05 ET (19:05 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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