Metals Stocks: Gold futures finish lower after Friday’s wild ride

by | Oct 24, 2022 | Stock Market

Gold finished Monday with a modest loss, following a wild ride in the final session of last week that saw prices for the precious metal briefly dip to their lowest in 2½ years.Price action
Gold futures
GCZ22,
-0.10%

GC00,
-0.10%
for December delivery fell $2.20, or 0.1%, to settle at $1,654.10 per ounce on Comex. Prices had finished 1.2% higher for Friday’s session, to gain 0.5% for the week.

December silver futures
SIZ22,
+0.81%
rose 12 cents, or nearly 0.7%, to settle at $19.189 an ounce, adding to last week’s 5.5% gain.

December palladium
PAZ22,
-2.04%
lost $37.70, or 1.9%, to $1,967.80 per ounce, while January platinum
PLF23,
-0.61%
fell $7.30, or 0.8%, at $926.60 per ounce.

Copper futures for December
HGZ22,
-1.15%
were down 4 cents, or 1.3%, to $3.4305 per pound.

What’s happening Gold wasn’t on stable ground to begin the week, as the “bears have been able to pull the rope a little more on their side,” said Naeem Aslam, chief market analyst at AvaTrade, in a market note. “The big question which is very much influencing the price of the precious metal is if the [Federal Reserve] is going to slow down the pace of its interest rate hikes.”

The market expects the central bank to increase interest rates by 75 basis points during their next meeting — pushing the U.S. Dollar index higher, he said. “The strength of the U.S. Dollar index is keeping checks on the yellow metal’s price.” The ICE Dollar Index
DXY,
-0.03%
traded modestly higher in Monday dealings, while Treasury yields were mixed. Each is impacting precious metals prices, along with shifting expectations about where the Fed funds target rate will be at the end of the year, analysts said. See: Here’s why gold has been a disaster this year despite geopolitical instability and stock market volatility There has been an “inverse correlation” between the gold price and U.S. 10-year bond yield since the COVID pandemic began, said Chintan Karnani, director of research at Insignia Consultants. “This inverse correlation will continue in 2023 as well.” Insignia Consultants expect the 10-year bond yield to form a long-term top anytime from now and before Valentine’s Day in 2023, said Karnani, in a Diwali gold and silver forecast report. “Gold has bottomed out or is nearing a bottom.” The gold price has also fallen less than rise in the U.S. Dollar index, he said. “This is a positive sign for 2023.” Meanwhile, the fact that traders are now contemplating a 50 basis point hike by the Fed in December is giving some gold analysts hope that the bottom — at least for now — might be in. For gold, the trend is still lower for now, but “once we can actually say we have reached peak hawkishness, the outlook for gold will very likely shift to neutral (if not bullish) from bearish,” said analysts at Sevens Report Research, in Monday’s newsletter.

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