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Kitco May 04, 2016 01:01:30 AM

Gold Sees Modest Profit Taking After Hitting 15-Month High Monday

Paul Ploumis
ScrapMonster Author
The gold market saw some modest profit-taking pressure kick in from the shorter-term futures traders at late-morning Tuesday.

Gold Sees Modest Profit Taking After Hitting 15-Month High Monday

(Kitco News) - The gold market saw some modest profit-taking pressure kick in from the shorter-term futures traders at late-morning Tuesday, after June Comex gold hit a 15-month high of $1,306.00 Monday. The U.S. dollar index also saw a corrective bounce today, after notching an eight-month low overnight. The firmer greenback today and weaker crude oil prices were also negative outside markets for the precious metals on this day. June Comex gold was last down $6.50 at $1,289.30 an ounce. July Comex silver was last down $0.267 at $17.415 an ounce.

It was a risk-off day in the marketplace Tuesday, which did limit the selling pressure in safe-haven gold. Most world stock markets were under pressure Tuesday after some weak manufacturing data coming out of China, the world’s second-largest economy. The Caixin purchasing managers’ index (PMI) came in a 49.4 in April from 49.7 in March. A reading below 50.0 suggests contraction in the sector. April marked the 14th  month in a row of a number below 50.0.

In other overnight news, the Australian central bank cut its interest rate by 0.25%, to 1.75%. The move was not a big surprise to the marketplace.

The European Union said in a report Tuesday that it sees weaker Euro zone growth this year, mainly due to the economic growth slowdown coming from China. The European Commission now sees the Euro zone’s GDP at 1.6% in 2016, from the 1.7% rise it forecast in February.

A weakening U.S. dollar index that fell to another eight-month low overnight has been a bullish element for the raw commodity sector recently. Interestingly, a report coming out of China said speculators in China are very heavily trading markets like steel bars and other commodities that normally don’t see high trading volumes. This is yet another clue that many in the marketplace think the raw commodity bust has ended and that a boom is developing in the sector.

The other “outside market” saw Nymex crude oil prices lower Tuesday, and hovering just below $44.00 a barrel. Reports said major oil-producing countries are still pumping almost flat-out, in an already glutted world oil market.

News reports said Monday’s price action saw the largest daily money inflow to the gold ETF, SPDR Gold Trust, in five years.

Courtesy: Kitco News

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