Gold prices edged lower on Monday as the sight of U.S. and European states preparing to reopen their economies supported appetite for risk assets.
By 11:30 AM ET (1530 GMT) gold futures for delivery on the Comex exchange were down 0.6% at $1,725.30 an ounce, while spot gold was down 1.0% at $1,712.32 an ounce.
Silver futures were also moderately lower, down 0.1% at $15.31 an ounce, while platinum futures edged up 0.5% to $777.40 an ounce.
Trading was relatively muted ahead of a week in which both the Federal Reserve and European Central Bank will hold policy meetings. The Bank of Japan’s announcement that it had scrapped its self-imposed limit on buying Japanese government bonds had little effect, despite playing to the narrative of general fiat currency debasement.
A more optimistic mood settled on markets on Monday after New York Governor Andrew Cuomo and Italian Prime Minister Giuseppe Conte outlined plans to restart their economies after the ravages of the coronavirus pandemic. U.S. Treasury yields rose by between two and five basis points.
European sovereign yield spreads also narrowed further and ultra-safe German Bunds traded weaker in the wake of Standard & Poor’s decision not to downgrade Italy’s credit rating after the closing bell on Friday.
The frenzy of protection-seeking seen in recent days, with daily flows into gold-backed ETFs easing well off their highs, and net speculative positions, as reported by the Commodity Futures Trading Commission, falling to their lowest since July, according to data released on Friday. Net longs in silver are also trading close to a nine-month low.
Analysts at JPMorgan (NYSE:JPM) note that the implied volatility of put and call options on gold has also shifted in the last week to a position to show more demand for puts than calls, suggesting that for many, the time has come to lock in profits after a 13% rally in only four months.
Even so, the market is still showing pockets of extreme tightness. Bloomberg quoted Robert Higgins, chief executive officer at Argent Asset Group LLC in Wilmington, Delaware, as saying that premiums for the U.S. Mint’s Gold Eagle coins have reached unprecedented levels, with customers now paying $135 per ounce over the equivalent bullion weight.