(Kitco News) - The gold market saw some technical selling pressures ending Tuesday’s session down on the day, pushed lower by improved investor risk sentiment and a stronger U.S. dollar.
June gold futures settled the session at $1,337.30 an ounce, down 0.71% on the day.
At the same time, May silver futures last traded at $16.392 an ounce, down 1.7% on the day.
According to analysts, the precious metals market felt downward pressure on Tuesday after bargain hunters jumped back into equity markets following Monday’s nearly 3% across-the-board drop in North American indices. Modest gains in the U.S. dollar index was also weighing on the yellow metal. The U.S. dollar last traded at 90 points, up 0.14% on the day against a basket of global currencies.
The gold market is tread water, analysts noted, caught in a near-term trading channel ahead of Friday’s nonfarm payrolls report. DailyFX.com warned that it sees few profitable opportunities in the gold market, even if prices have room to move slightly higher.
“At the moment there is little edge given that price is in the middle of the range from 1302 up to 1366. It is best to operate around the perimeters, that is to look for fading opportunities at support and resistance,” DailyFX.com’s analysts said.
While gold prices are below initial support levels, Bill Baruch, president of Blue Line Futures said that despite Tuesday’s selling pressure, he is still encouraged by the market’s resiliency.
“If the tape can continue to be constructive there is, without doubt, enough fundamental firepower to create a breakout this week,” he said.
Analysts at Scotiabank pointed out that they remain bullish on gold as long as prices hold support above $1,331.60 an ounce.
However, not all see the potential for the yellow metal. Analysts at BNP Paribas said that by their standards, gold is slightly overpriced with a positioning score of 6.1 out of 10. The firm sees a lot more potential for silver, which according to its calculations has a positioning score of 1.1 out of 10.
Despite the modest selling pressure, the gold market is seeing a strong start to the second quarter. Earlier in the day, the CME Group said that daily average trading activity in gold futures hit a record in the first quarter of 382,000 contracts, an increase of 43% compared to the first quarter of 2017.
Meanwhile, daily average trading volume for silver was up 34% to 109,000 contracts in the first quarter of 2018.
During the first quarter, gold prices rose nearly 2%. However, silver has underperformed, dropping almost 4% in the first three months of the year.
