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Gold futures eased back on Thursday, a day after settling at their highest in nearly two weeks in the wake of the inauguration of Joe Biden as the 46th U.S. president.
A weakening U.S. dollar and expectations that the Biden administration will support government spending to help boost the virus-hobbled economy provided the recent lift to gold prices.
However, “a pull back was due” for the precious metal following its recent gains, said Naeem Aslam, chief market analyst at AvaTrade.
Traders also eyed the latest meeting of the European Central Bank. The central bank, as expected, made no changes to interest rates or its asset-buying program on Thursday after moving last month to bolster its efforts to support the eurozone economy. The ECB also will continue its asset purchase program at a pace of 20 billion euros a month.
“From the ECB’s conference, it is pretty much clear that the bank isn’t worried about the economic growth that much,” said Aslam. “The overall summary taken by investors is that things are becoming better. This has taken some wind out of the gold rally.”
February gold GC00, -0.20% GCH21, -0.23% declined by $3.70, or 0.2%, to $1,862.80 an ounce, after rising 1.4% on Wednesday to the highest finish for a most-active contract since Jan. 7, FactSet data show.
Silver for March delivery SI00 SIH21 shed 11 cents, or less than 0.1%, to trade at $25.755 an ounce, following a rise of 1.8% advance in the prior session.
Overall, “the U.S. economic data was better than the expectations,” and this has also influenced prices for gold, said Aslam.
Initial jobless claims declined by 26,000 to a seasonally adjusted 900,000 in the seven days ended Jan. 16, the government said Thursday. Meanwhile, new-home construction in December was at a seasonally-adjusted annual rate of 1.67 million, up 5.8% from November, while the the Philadelphia Federal Reserve’s business condition index jumped to 26.5 in January from 9.1 in December.
Politics have also taken the spotlight in the precious metals market.
“The presidency of Joe Biden started with expectations for a new stimulus and with a new rally for the bullion price,” wrote Carlo Alberto De Casa, chief analyst at ActivTrades.
Among other metals traded on Comex, March copper HGH21, -0.08% traded at $3.638 a pound, down 0.1%. April platinum PLJ21, +1.14% added 1.3% to $1,131.10 an ounce, but March palladium PAH21, -1.11% fell 1% to $2,378.50 an ounce.
