Metals Stocks: Gold’s slide gathers steam after upbeat U.S. economic reports

Gold futures retreated Thursday, gaining steam after a batch of domestic data, but remaining on track for a modest weekly gain.

June gold GCM9, -0.49%  on Comex was off $6.40, or 0.5%, at $1,291.40 an ounce, while July silver SIN9, -0.65%  was off 10.2 cents, or 0.7%, at $14.71 an ounce. Gold is up 0.3% so far this week, while silver is down 0.5%, according to FactSet data.

“The yellow metal looks caught in two minds at the moment, with the break below $1,280 — a major support level this year – failing to generate the downside momentum that you would typically expect,” said Craig Erlam, senior market analyst at Oanda, in a note.

“The rebound hasn’t exactly been convincing either though and looks highly dependent on risk appetite in the markets remaining weak,” he said. “The recent correction in the dollar [was] also supportive for gold over the last few weeks but that could reverse course again, with the U.S. still in a better position that many of its peers, particularly in defensive markets.”

Bullion took a leg lower on Thursday after upbeat economic reports, with a reading of people who applied for unemployment showing that initial jobless claims, a rough way to measure layoffs, sank by 16,000 to a seasonally adjusted 212,000 in the seven days ended May 11, underscoring health in the job market.

Meanwhile, a report on home building indicated that housing starts increased to an annual rate of 1.24 million last month, the Commerce Department said Thursday, above consensus expectations of economists polled by MarketWatch for a rise at 1.21 million pace, and the Philadelphia Fed manufacturing index in May rose to a four-month high of 16.6 after registering 8.5 in April.

Gold briefly traded above the $1,300 level in Wednesday dealings, despite overall strength in the U.S. dollar week to date. A stronger currency can be a negative for commodities priced in it, making them more expensive to users of other currencies.

Gold had found support from modest, haven-related demand as investors kept an eye on an escalating U.S.-China tariff battle and rising tensions in the Middle East. Stocks, however, have subsequently managed to claw back some lost ground as anxieties about tariffs have receded for the moment.

“There is also no more additional bad news from the trade-war front. If gold continues to fall then $1282 will be the key support to watch,” Chintan Karnani, chief market analyst at Insignia Consultants, based in New Delhi, told MarketWatch.

He said “short-term traders and investors are also not investing as gold prices are falling.”

Read: Are stock-market investors ignoring Iran just like they ignored China?

In other metals trade, July copper HGN9, +0.80%  rose 1.5 cents, or 0.5%, to $2.758 a pound.

Commodity analysts led by Jeffrey Currie at Goldman Sachs said expected stimulus efforts by China should be supportive for metals, particularly copper.

In a note, they argued that Chinese policy makers “are likely to offset downside risks imposed by trade tensions with easing measures which tend to disproportionally benefit metal-intensive sectors such as property and infrastructure. Therefore, the macro implications for metals demand are still manageable and copper looks cheap at current levels.”

July platinum PLN9, -0.71%  was $6.50 lower at $841.20 an ounce, down 0.8%; June palladium was down $1.70, or 0.1%, at $1,331.20 an ounce.

Among exchange-traded funds, SPDR Gold Shares GLD, -0.45%  declined by 0.3%.

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