Gold price retreats toward $4,750/oz as SPDR Gold Trust posts sizable outflow

Global gold prices closed lower on Monday (April 13) but remained well above the session’s lows, after the US dollar reversed course following a sharp early rise. The SPDR Gold Trust, the world’s largest gold ETF, sold more than 5 tonnes of gold despite modest net buying in the previous week.

Prices at the close

At the close, spot gold in New York traded at $4,741.9 per ounce, down $7.3 from the previous close, a 0.15% decline, according to Kitco data.

Spot silver settled at $75.7/oz, down 0.4% from the previous close.

On COMEX, June gold futures settled down 0.4% at $4,767.4/oz.

Intraday moves and currency impact

During the session, spot prices dipped below $4,640/oz, the lowest since April 7, as the dollar strengthened alongside oil. By the close, oil retreated below $100 a barrel and the dollar weakened again, easing some downside pressure on precious metals.

The Dollar Index, which tracks the greenback against a basket of six major currencies, fell 0.28% to 98.37, after briefly trading above 99 earlier in the day.

US-Iran conflict and oil as key drivers

The dynamics of the US-Iran conflict remained the main driver for gold. The war has pushed crude oil higher, supporting global inflation pressures and increasing the likelihood that central banks keep rates higher for longer, while also boosting the USD’s safe-haven appeal.

These factors have weighed on gold, a non-yielding asset priced in USD. The pressure is eroding gold’s traditional roles as a safe haven against geopolitical and economic risk and as an inflation hedge.

Any de-escalation in Gulf tensions would likely relieve gold’s downside pressure, while escalation would weigh on prices.

Developments over the weekend and Monday

After negotiations between the US and Iran in Pakistan failed last weekend, the US Navy began blockading the Hormuz Strait on April 13, following President Donald Trump’s announcement on April 12.

In response, Brent crude for June delivery in London rose more than 4%, and WTI for May in New York rose, closing above $99 a barrel. Intraday, both benchmarks briefly exceeded $100.

Market commentary and Fed expectations

“Gold markets are being driven by the news. All eyes are on crude oil, because oil prices will determine inflation, which in turn will influence Fed policy,” said Phillip Streible, Blue Line Futures’ chief market strategist, in an interview with Reuters.

Data from CME’s FedWatch Tool showed that the futures-implied probability of a Fed rate cut this year is around 29%, down from about 40% a month earlier.

ETF flows and longer-term outlook

Since the US-Iran conflict began on Feb 28, spot gold has fallen by more than 10%. Analysts, however, remain optimistic about gold’s longer-term prospects.

“We see selling pressure on gold from war as a positive for gold’s long-term prospects, as leveraged positions unwind,” said a SP Angel report.

The SPDR Gold Trust sold 5.2 tonnes of gold in the first trading session of the week, reducing holdings to about 1,047.2 tonnes. Last week, the fund was net buyers by 1.4 tonnes.

Early Asia trading

In early Asia trading hours, both gold and silver prices rose. At 6:15 a.m. Vietnam time, spot gold rose more than $22/oz, up about 0.5%, trading around $4,764/oz. Spot silver rose about 0.4%, trading near $76/oz.

The above spot price implies about 151.3 million dong per tael when converted at Vietcombank’s USD selling rate. Vietcombank’s website quoted USD at about 26,111 VND (buy) and 26,361 VND (sell).