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PRECIOUS-Gold heads for first monthly loss this year as rally stalls in Q2
June 30, 2017 / 2:32 PM / 5 months ago

PRECIOUS-Gold heads for first monthly loss this year as rally stalls in Q2

    * Gold down 2 pct in June and 0.4 pct in Q2
    * Gold still up 8 pct in H1 after strong start to year
    * Silver worst Q2 performer, down 9 pct; palladium up 6.1
    * GRAPHIC-2017 asset returns:

 (Updates prices, adds comment)
    By Jan Harvey
    LONDON, June 30 (Reuters) - Gold eased on Friday to stay on
track for its first monthly loss this year, as hints from
leading central banks that the era of easy money may be coming
to a close pushed bond yields higher, hurting the non-interest
bearing metal.
    While it is still up 8 percent in the first half, gold has
stalled in the second quarter after a strong start to the year,
and is little changed from where it ended March. 
    Spot gold        was down 0.1 percent at $1,244.40 an ounce
at 1415 GMT, while U.S. gold futures        for August delivery
were $1.70 an ounce lower at $1,244.10. 
    Spot prices have fallen nearly 2 percent so far in June, and
are down 0.4 percent in the second quarter. 
    Comments from the euro zone, British and Canadian central
banks this week indicated that quantitative easing programmes in
place since the financial crisis may be being wound up, leading
to a gradual normalisation of interest rates.              
    That comes in the wake of the Federal Reserve's decision to
hike U.S. interest rates at its June meeting, and its indication
that it will press ahead with plans to shrink its $4.5 trillion
in bond holdings.             
    "The most important thing for the gold market is that we
have monetary policy tightening in the United States, and so
with a further interest rate hike the gold price has gone down,"
LBBW analyst Thorsten Proettel said. 
    While the European Central Bank remains cautious on
tightening monetary policy, the trend is turning more towards
the hawkish side, he said. "From that perspective, it's bad for
    Germany's benchmark 10-year bond yield was heading for its
biggest weekly jump since late 2015, topping a week in which
yields across the euro zone have soared as investors brace for
an end to the era of ultra-easy monetary policy.          
    On the other side of the Atlantic, U.S. Treasury yields rose
for a fourth straight day as inflation data was not seen as weak
enough to delay the Fed's expected path on interest rate hikes.
    Rising yields helped offset the positive impact of a weaker
dollar on gold. The U.S. currency was on course for its worst
quarter in seven years.       
    "The U.S. dollar has softened, though this does not appear
to have had the positive effect on price as we might have
hoped," MKS said in a note. 
    Among other precious metals, silver        was up 0.3
percent at $16.64 an ounce. Silver has seen the biggest fall
among major precious metals this quarter, down nearly 9 percent,
while palladium        is the best performer, up 6.1 percent. 
    Palladium was down 0.3 percent at $844.75 an ounce on
Friday, while platinum        was flat at $919.75. 

 (Reporting by Jan Harvey; Additional reporting by Vijaykumar
Vedala and Nithin Prasad in Bengaluru; Editing by Jason Neely
and Mark Potter)

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