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Gold lost ground Wednesday, headed for a third consecutive decline, with prices unable to find traction as demand for equities and data showing smaller-than-expected job losses in the U.S. private sector dulled haven-related demand for the precious metal.
“As risk appetite grows, gold as a safe haven becomes less attractive for investors,” said Carsten Fritsch, analyst at Commerzbank, in a note.
Gold for August delivery GCQ20, -1.28% on Comex was down $21.40, or 1.2%, at $1,712.60 an ounce, after the most-active contract registered declines in the past two sessions.
Fritsch said gold is reliant on support from exchange-traded fund-related buying amid a dearth of demand from Asia as a result of the COVID-19 pandemic. The gold-backed SPDR Gold Trust ETF GLD, -1.53% traded 1.1% lower Wednesday.
“Though gold ETFs still registered inflows yesterday, these were much lower than in the days before. Gold is reliant on high ETF inflows to offset the acute demand weakness in Asia,” he said. “Whether the pent-up demand will be released later in the year is questionable, to say the least. At present nobody can predict what will happen to consumer behavior in India once the lockdown is lifted.”
The situation doesn’t look much better in China, Fritsch said, noting “negative net gold imports from Hong Kong and the fact that imports from Switzerland dwindled to zero in April.
“It is possible that the market will soon be flooded by even more surplus gold from China for which there is currently no domestic demand,” he said.
In Wednesday dealings, U.S. benchmark stock indexes, which have climbed back to early March levels on optimism over efforts to reopen the economy, moved higher. Gold has failed to find much in the way of traditional haven support despite incidents of civil unrest across the country. Alongside peaceful demonstrations against police brutality, incidents of looting and arson have occurred.
Gains in the stock market followed data from Automatic Data Processing Inc., which showed the private sectoor shed 2.76 million jobs in May. That was well below forecasts from economists surveyed by Econoday who expected a loss of 8.66 million. In April, the private sector shed 19.56 million jobs.
Meanwhile, July silver SIN20, -1.28% declined by 25.5 cents, or 1.4%, at $18.005 an ounce on Comex.
“The gold market is clearly exhibiting much more liquidating pressure than the silver market perhaps because silver could see quicker physical demand recovery, if a long pattern of risk on equity gains correctly signals better global economic activity,” analysts at Zaner Metals said in a daily note.
Among other metals, July copper HGN20, -0.22% fell by 0.1% to $2.489 a pound. July platinum PLN20, -0.27% lost 0.3% to $866.40 an ounce and September palladium PAU20, -0.21% traded at $1,966.20 an ounce, down 0.8%.
