Gold prices came under renewed pressure on Wednesday as a combination of news elsewhere supported risk appetite, draining money away from haven assets.
The market stayed in relatively narrow ranges, however, ahead of the Federal Reserve’s post-meeting statement and press conference from Chairman Jerome Powell later in the day. That will be followed on Thursday by the European Central Bank’s latest policy meeting.
By 11:30 AM ET (1530 GMT), gold futures for delivery on the Comex exchange were down 0.4% at $1,715.70 an ounce, while spot gold was down 0.3% at $1,703.03 an ounce.
The losses came after Gilead Sciences (NASDAQ:GILD) said that a trial of its antiviral drug remdesivir had shown partial success in treating Covid-19 virus victims, sparking hopes of a quick rebound to economic activity.
The market has already written off the first half of 2020, as evidenced by the way it ignored the 4.8% drop in first-quarter gross domestic product in the U.S. and a record drop in European economic sentiment, both of which were announced earlier Wednesday. It appears to have fully discounted an even worse second quarter, leaving the big open question of how far it can rebound in the second half of 2020. The availability of an effective drug treatment – a scenario not widely expected before next year – could shift expectations significantly.
If expectations do shift, gold is looking slightly stretched at current valuations to some.
Paul Rejczak, an analyst with Sunshine Profits, noted that a drop below $1,700 could trigger weakness.
“It is trading above February-March local highs,” Rejczak said in a regular post on Investing.com. “So it looks like a consolidation within a medium-term uptrend. But if the price gets below $1,700 level, we could see more selling pressure.”
Silver futures profited from their cyclical qualities, rising 0.9% to $15.31 an ounce, while platinum futures rose 3.1% to $806.25 an ounce.