Metals Stocks: Gold inches closer to a record high, buoyed by recession fears and weaker U.S. dollar

by | May 4, 2023 | Stock Market

Gold futures marked their highest settlement since August 2020 on Thursday while flirting with a new record, and silver prices finished the session at their highest in more than a year. Overall weakness in the U.S. dollar, banking-sector issues and worries surrounding a potential recession boosted haven demand for the precious metals.

Price action
Gold for June delivery

gained $18.70, or 0.9%, to settle at $2,055.70 per ounce on Comex after trading as high as $2,085.40. The settlement was the second-highest on record and the highest for a most-active contract since Aug. 6, 2020, according to Dow Jones Market Data.

Silver for July

delivery gained 55 cents, or 2.1%, to $26.23 per ounce, the highest finish since March 10, 2022.

Palladium for June delivery
rose $24.80, or nearly 1.8%, to $1,441.60 per ounce, while platinum for July
fell $11.50, or 1.1%, to $1,050.30 per ounce.

Copper for July delivery
edged up by 2 cents, or 0.5%, to $3.86 a pound.

Market drivers “The blend of economic concerns, sliding Treasury yields and a weak dollar allowed gold to shine again,” said Charalampos Pissouros, senior investment analyst at XM. The U.S. dollar weakened on Wednesday after Federal Reserve Chair Jerome Powell suggested that the central bank would likely keep interest rates on hold after hiking its policy rate by 5 percentage points since March 2022. A weaker dollar has helped to lift gold, as have fears about a weakening U.S. economy. In Thursday dealings, the ICE U.S. Dollar Index
a gauge of the currency’s strength against its main rivals, was down nearly 0.1% to 101.26, trading 0.3% lower week to date. It has lost more than 2% so far this year. Gold traders believe they have “a real shot at recording another all-time high as the Fed has finally thrown in the towel on the interest-rate-hike agenda,” said Naeem Aslam, chief investment officer at Zaye Capital Markets. “However, it is important not to underestimate the Fed, as it can and will change its narrative fairly swiftly if inflation doesn’t tame.” On Thursday, gold futures based on the most-active contract reached their highest intraday level since Aug. 7, 2020, the day futures prices set a record intraday high of $2,089.20, according to Dow Jones Market Data. The all-time nominal high for most-active gold futures is $2,069.40, seen on Aug. 6, 2020. Silver has also gotten a boost, with futures prices settling at their highest level in more than a year. Read: Silver hit a 1-year high. Here’s why it can keep climbing.

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