Precious metals were losing value as the trade week began with the yellowish variation dropping to its lowest rate in more than 14 days, according to Bloomberg.
The whitish precious metal endured losses as high as 1.3 percent on Monday. Gold futures fell as traders became increasingly concerned about the prospect of further declines as indicated by a technical indicator.
These days have been rough for bullion, which started the year strong after having endured annual losses for the first time in 12 years in 2013. The yellowish metal fell 1.9 percent last week.
"Gold closed last week below its 200-day moving average, which is a bearish technical factor that may pressure the gold market," precious metals analyst Liu Xu with Capital Futures Co. in Beijing told the news source on Monday.
At 9:53 a.m. on Monday, gold futures fell 0.46 percent, a $5.98 loss to $1,288.32 per troy ounce. Silver futures dropped 1.14 percent, a 22-cent loss to $19.40 per troy ounce.
Losses cut into year's gains
The strong performance thus far this year for gold futures has dropped as a result of the recent rough waters over which bullion is navigating as of late. Hovering at about 7 percent, the gains also are likely to be impacted by activity by the U.S. Federal Reserve, which is forecast to continue reducing the breadth of economy-spurring stimulus policy.
When less U.S. dollars are devoted to purchasing debt, the value of the greenback climbs. And when the world's reserve currency rises, the price of gold slips because the two entities typically perform the inverse of one another.
Thus far this year, policy makers with the U.S. Federal Reserve have slashed monetary stimulus, which continued the effort from late last year. The body also has said it is aiming to close the program by the end of this year.
Reduced pace of trade
Reuters reports trade of the precious metal during the early component of the Monday session was slow and thin.
That raised questions about liquidity as well, one analyst told the news source.
"One aspect is that the market is pretty thin today and liquidity is going to be constrained," analyst Victor Thianpiriya with ANZ told the wire service. "But people have been spooked by the near 10-ton decline in SPDR holdings that we saw last week."
Ukraine conflict of key consideration
The ongoing conflict in Ukraine with Russia initially was beneficial to the price of gold, Reuters reports.
Ukraine nationals ousted the prime minister in late February. Russian troops filed into the Crimea region of Ukraine and last month the region voted to secede from Ukraine and join Russian. But there has been some resistance – both domestic and internationally.
Representatives from Russia, Ukraine, the U.S. and the European Union hammered out a pact late last week that aims to cut down on the amount of strife between pro-Russia separatists and Ukraine security officials.
The Geneva pact was finalized on Thursday of last week, MarketWatch reports. That called on activists and militants in the region to relinquish their weaponry for the purposes of establishing circumstances more amenable to fomenting peace.
Another effort has grown in popularity to control the situation in Ukraine between feuding sides.
The Organization for Security and Cooperation in Europe fulfills a mission as a mediator when it comes to conflict in various regions.
Spokesman Michael Borciurkiw with the organization said it has been watching closely what is happening for the purpose of being able to conform challenges as they manifest.
"Teams have been getting access," the spokesman told the news source. "There have been some physical barriers, checkpoints and things like that. … In most cases, with some negotiation, they are allowed through."
This material is conveyed as a solicitation for entering into a derivatives transaction.
This material has been prepared by a Daniels Trading broker who provides research market commentary and trade recommendations as part of his or her solicitation for accounts and solicitation for trades; however, Daniels Trading does not maintain a research department as defined in CFTC Rule 1.71. Daniels Trading, its principals, brokers and employees may trade in derivatives for their own accounts or for the accounts of others. Due to various factors (such as risk tolerance, margin requirements, trading objectives, short term vs. long term strategies, technical vs. fundamental market analysis, and other factors) such trading may result in the initiation or liquidation of positions that are different from or contrary to the opinions and recommendations contained therein.
Past performance is not necessarily indicative of future performance. The risk of loss in trading futures contracts or commodity options can be substantial, and therefore investors should understand the risks involved in taking leveraged positions and must assume responsibility for the risks associated with such investments and for their results.
Trade recommendations and profit/loss calculations may not include commissions and fees. Please consult your broker for details based on your trading arrangement and commission setup.
You should carefully consider whether such trading is suitable for you in light of your circumstances and financial resources. You should read the "risk disclosure" webpage accessed at www.DanielsTrading.com at the bottom of the homepage. Daniels Trading is not affiliated with nor does it endorse any third-party trading system, newsletter or other similar service. Daniels Trading does not guarantee or verify any performance claims made by such systems or service.