Gold prices finished lower on Thursday, with the metal's short-term prospects linked to a firmer dollar, but investors keeping watch over the impact of the partial shutdown of the U.S. government and ongoing U.S.-China trade dispute.
Longer term, most analysts remain upbeat in their outlook for precious metals as a mixed picture for the economic outlook and major global issues, including those trade negotiations and Brexit uncertainty, boost the appeal of the haven metal.
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Gold for April delivery on Comex GCJ9, +0.08% the contract with the most open interest, fell $4.30, or 0.3%, to settle at $1,285.90 an ounce. March silver SIH9, +0.16% lost 8 cents, or 0.5%, to $15.30 an ounce.
The ICE U.S. Dollar Index DXY, -0.08% was up by 0.5% at 96.629. A firmer dollar can be a negative for commodities priced in the currency, making them more expensive to users of other currencies.
"As usual, strength in the dollar would appear to be the primary culprit behind the weakness throughout the metals complex," said analysts at Zaner Precious Metals, in a Thursday note.
The greenback held on to a modest gain after data Thursday revealed that the weekly number of Americans applying for unemployment benefits fell below 200,000 for the first time since 1969.
The jobless claims data suggest "that the American labor market remains fairly robust despite increasing economic uncertainty," said Mark O'Byrne, research director at GoldCore.
However, "the continuing partial shutdown of the U.S. government and risk that the trade wars with China deepen should support gold," he told MarketWatch, adding that Washington and Beijing are "miles and miles" from resolving their trade war, according to U.S. Commerce Secretary Wilbur Ross.
On Wall Street, U.S. stocks were mixed Thursday as investors continued to wade through a tide of corporate earnings.
Meanwhile, analysts are largely separating the near-term conditions for gold from a largely unwavering positive view for 2019.
"We remain bullish on the prospects for gold and silver prices and have revised up our end-2019 forecasts to $1,350 and $17.50 per ounce, respectively, as we expect both metals to attract investors seeking safe havens," said commodities economists at Capital Economics, led by Caroline Bain, in a quarterly research note.
"We think that the prices of both gold and silver will struggle to make further gains in 2020 as equities bounce back and safe-haven demand starts to fade," they added.
Boosting gold forecasts this year is the firm's expectation that the S&P 500SPX, +0.14% will fall to about 2,300 by end-2019 and that the Japanese yen will appreciate to ?105 per dollar by the end of this year. They expect lower bond yieldsTMUBMUSD10Y, +0.18% which move opposite of bond prices, also boosting the appeal of nonyielding gold as an asset. Finally, the economists believe global central banks will buy about 500 metric tons of the precious metal this year, up from 373 metric tons two years ago, with Russia expected to continue to lead the buying.
In other trading, March palladium PAH9, +0.23% settled down 2.1% at $1,280.70 an ounce. The contract has largely pulled back after settling at a record a week ago to top gold futures for the first time in about 16 years.
April platinum PLJ9, +0.10% rose 1.1% to $805 an ounce, and March copper HGH9, +0.30% lost 0.4% to $2.645 a pound.
Among exchange-traded funds, the gold-backed SPDR Gold Shares GLD, -0.16% was down 0.2% and iShares Silver Trust SLV, -0.42% traded down 0.4%. The VanEck Vectors Gold Miners ETF GDX, +0.05% rose 0.2%.
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