Metals Stocks: Gold ends down for the session and week as Powell remarks suggest aggressive tightening

by | Aug 26, 2022 | Stock Market

Gold prices fell on Friday, building on their loss for the week, as Federal Reserve Chairman Jerome Powell emphasized the need to bring down inflation in a speech at the Jackson Hole central bankers conference, supporting prospects for higher interest rates. Price action
Gold futures
GCZ22,
-1.21%
for December delivery fell $21.60, or 1.2%, to settle at $1,749.80 per ounce. For the week, the most-active contract ended 0.7% lower, according to Dow Jones Market Data.

September silver
SIU22,
-1.83%
settled at $18.746 per ounce, down 37 cents, or 2%, for the session, losing 1.7% for the week.

Palladium futures
PAU22,
-1.72%
for September lost $17.90, or 0.8%, to $2,121.90 per ounce, with prices nearly 0.5% lower for the week, while platinum futures
PLU22,
-0.86%
for October delivery declined $18.60, or 2.1%, to $855.30 per ounce, posting a weekly loss of 3.7%.

Copper
HGU22,
-0.46%
for September delivery fell a faction of a cent to settle nearly unchanged at $3.697 per pound, but up 0.9% for the week.

What analysts are saying It seems that everyone settled on the “’tighter for longer’ interpretation,” of Powell’s remarks, “sparking deep, across-the-board selling in all the markets,” said Brien Lundin, editor of Gold Newsletter. “Gold and silver certainly were not immune.”

In his speech Friday, Powell delivered a blunt message that the Fed will keep working to bring inflation down until it is done and that the fight will cause pain to households and businesses. Powell is “tilting towards aggressive tightening going forward until inflation is under control,” Jeff Wright, chief investment officer at Wolfpack Capital, told MarketWatch. This will send gold “lower as it cannot compete for risk free capital with a rising yield” for U.S. Treasurys.  A stronger U.S. dollar is a biproduct of rising rates and gold will suffer from that as well, he added.  Powell kept the door open for a 0.75 percentage point interest rate hike in September, saying that “another unusually large increase could be appropriate” next …

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