Gold steadied on Thursday after its biggest one-day drop in more than six weeks, with a retreat in the dollar arresting the slide, though moves were muted as markets await the outcome of the looming French presidential election. Polls ahead of the French vote, which begins this weekend, give both far-right and far-left candidates a chance of making it into next month’s run-off, though centrist candidate Emmanuel Macron is shown in the lead. The euro rose to a three-week high against the U.S. dollar.
Spot gold was up 0.16 percent at $1,281.02 an ounce by 2:32 p.m. EDT (1832 GMT). The metal hit a five-month high of $1,295.42 on Monday before pulling back, and was on track to fall this week after five straight weeks of gains. U.S. gold futures for June delivery settled up 0.03 percent at $1,283.80. “Even though momentum has been positive there are other factors preventing a quick move higher from here – the sentiment is still that there will be stronger data from the U.S., and yields will probably rise. That will likely limit the upside (for gold),” said ABN Amro analyst Georgette Boele.
Improving appetite for equities, which edged higher in Europe and the United States, was also undermining demand for gold as a haven from risk, she added. Holdings of the world’s largest gold-backed exchange-traded fund, New York-listed SPDR Gold Shares, rose 11.8 tonnes on Wednesday for their biggest one-day inflow since September, data from the fund showed. “While the metal is well positioned for a test of $1,300 with geopolitical concerns underpinning its safe-haven status, the failed tests of $1,290 are beginning to weigh upon investor confidence,” MKS said in a note.
Among other precious metals, spot palladium was the strongest gainer of the day, rising 3.2 percent to $799.58 an ounce, on track for its biggest one-day jump since early February. “Supply will struggle to register any growth, and indeed is likely to show a small decline following unusually high production in Russia in 2016. Demand, on the other hand, will continue to expand,” said Johnson Matthey Precious Metals Management in a quarterly report. “Higher vehicle production, combined with an increase in average catalyst loadings at a global level, will drive autocatalyst demand for the metal to another record level.” Silver was down 0.4 percent at $18.01, while platinum was up 1.1 percent at $973.24.