Metals Stocks: Gold futures settle at lowest in more than 2 years as dollar, yields soar

by | Sep 23, 2022 | Stock Market

Gold futures on Friday settled at their lowest price since April 2020, under pressure as the U.S. dollar soared versus major rivals and short-term bond yields jumped amid fears aggressive monetary tightening by central banks could spark a global recession.Price action
Gold for December delivery

fell $25.50, or 1.5%, to settle at $1,655.60 an ounce on Comex, the lowest for a most-active contract since early April 2020. For the week, prices ended 1.7% lower, according to Dow Jones Market Data.

December silver
fell 71 cents, or 3.6%, to $18.91 an ounce, for the lowest finish in two weeks. Prices lost 2.4% for the week.

October platinum
was down 5.2% at $858.70 an ounce, ending with a weekly loss of 4.7%, while December palladium
lost 4.8% to $2,070.50 an ounce, losing 2% for the week.

December copper
declined by 3.7% to $3.343 a pound, for a weekly loss of 4.9%.

Market drivers Gold failed to benefit Friday from its status as a haven during periods of geopolitical and economic uncertainty.

“The pressure gold is coming under in the current macroeconomic environment, with interest rates going up across the world and likely to continue doing so for a number of months yet, means it is hard to see how the metal can make gains with the question more about how low it will go,” said Rupert Rowling, market analyst at Kinesis Money, in a note.

The Federal Reserve earlier this week delivered another outsize interest rate hike and signaled it would drive rates higher than market participants had previously anticipated. A number of other global central banks also delivered rate increases this week, underlining investor worries about the economic outlook. Gold’s “inability to break and trade over $1,700” after the Fed meeting is the key reason why gold is “trading with a falling bias,” said Chintan Karnani, director of research at Insignia Consultants. Short-term Treasury and other government bond yields jumped on Friday. Rising bond yields raise the opportunity cost of holding nonyielding assets like commodities. The dollar, meanwhile, continued its march higher, with the ICE U.S. Dollar Index
at its highest in more than 20 years. A rising dollar makes commodities priced in the unit more expensive to users of other currencies. The main supportive factor for gold remains the war in Ukraine, after Russian President Vladimir Putin this week moved to escalate the conflict and hinted a …

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