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Gold prices moved higher on Monday after the most actively traded contract finished off last week at its lowest price of the year as a stronger U.S. dollar and rising Treasury yields undercut the yellow metal.
Price action
-
Gold for April delivery
GC00,
+0.33% GCJ23,
+0.33%
rose $8.20, or 0.5%, to $1,825.30 per ounce on Comex. Prices on Friday marked a fifth consecutive session of declines, posted a fourth straight week of losses, and settled at their lowest since late December. -
May silver
SIH23,
-0.67%
fell by 6.1 cents, or 0.3%, to $20.875 per ounce. -
June palladium
PAH23,
+2.96%
rose $71.60, or 5.2%, to $1,450 per ounce, while April platinum
PLJ23,
+3.33%
gained $35.90, or 4%, to $943.80 per ounce. -
May copper
HGH23,
+0.84%
rose 5 cents, or 1.3%, to $4.0025 per pound.
Market drivers
Inflation should be great for precious metals prices, said Adrian Ash, director of BullionVault, in Monday commentary. Gold has often been used as a hedge against inflation.
However, inflation has apparently so far been supportive of gold prices only if it’s slowing down, he said. What had been the “New Year 2023’s stone-cold bullish case for gold and silver has now melted on hotter-than-expected inflation data.”
Gold prices earlier in February, he said, had been underpinned by expectations that the U.S. Federal Reserve and other central banks would stop raising interest rates and to start cutting their interest rates this year.
But the rising cost of living has “zapped the chances of a reversal in central-bank interest rates,” said Ash.
Data on Friday showed that the cost of U.S. goods and services jumped 0.6% in January — the biggest increase since last summer. On Monday, data revealed that orders for manufactured goods sank 4.5% in January, but if transportation is set aside, new orders rose by a solid 0.7% last month.
Gold prices retreated for the fourth straight week through Friday as data have shown that interest-rate hikes by global central banks have failed to slow the economy, stoking expectations that the Fed, European Central Bank and their rivals might raise policy rates even higher to try to combat inflation.
These expectations have weighed on gold prices while sending yields on global bonds higher. The yield on the 10-year Treasury note
TMUBMUSD10Y,
was nearing 4% on Monday.
“Gold has endured a sharp reality check with its price tumbling by almost $150 an ounce so far in February,” said Rupert Rowling, an analyst at Kinesis Money.
