Gold futures ended flat on Wednesday, with a further retreat in Treasury yields helping prices hold at their highest level since early June, but a turn higher this week for the U.S. dollar limited gains for the precious metal.
Price action
-
Gold futures for August delivery
GC00,
+0.08%
GCQ23,
+0.08%
settled unchanged $1,980.80 an ounce on Comex. That’s the same price at the end of Tuesay’s session, which marked the highest finish for a most-active contract since June 6, FactSet data show. -
Silver futures for September delivery
SI00,
+0.29%
SIU23,
+0.29%
climbed by 13 cents, or 0.5%, to $25.39 per ounce. -
October platinum
PLV23,
+0.36%
lost $9.60, or 1%, to $984.80 per ounce, while palladium for September
PAU23,
+0.49%
fell by $9.10, or 0.7%, to $1,307.40 per ounce. -
Copper futures for September
HGU23,
+0.53%
declined by 2 cents, or 0.4%, to $3.81 per pound.
Market drivers
“Slower inflation, higher gold prices might seem an odd headline to anyone who believes precious metals need the cost of living to rise for the bullion market to jump,” said Adrian Ash, director of research at BullionVault.
However, “interest-rate expectations matter much more right now, and after testing the floor at $1,900 three weeks ago, gold has shot higher on the sudden switch from higher-for-longer to peaking-sooner-than-later,” he told MarketWatch.
Gold futures trade higher for the week so far, and remain on track to notch gains for the month and year to date.
The U.S. dollar strengthened Wednesday, putting some pressure dollar-denominated gold prices. The ICE U.S. Dollar Index
DXY,
a gauge of the dollar’s value against major currencies, rose 0.4% to 100.307, with the index trading around 0.4% higher for the week.
U.S. Treasury yields, however, continued to move a bit lower, with the 10-year Treasury yield
TMUBMUSD10Y,
down 5.1 points at 3.742% and trading down for the week. Falling bond yields can boost the luster of gold, which offers no yield.
Looking ahead, next week’s Federal Reserve policy meeting could be a make-or-break moment for gold, as investors will be watching to try and gauge whether the latest batch of U.S. economic data has prompted the Fed to significantly change its plans for further interest rate increases.
“How long gold can continue to trade at such high levels remains to be seen with the reaction to next week’s Fed rate decision a key staging post for gold’s long-term durability,” said Rupert Rowling, a market analyst at Kinesis Money.
“Considering that another increase is priced in already, gold may yet prove able to shrug off the latest hike but if there is an indication in the press conference and supporting commentary that further hikes are still likely, then gold could fall sharply.”
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