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Metals Stocks: Gold ends higher for 5th day as safe-haven assets rise with U.S. – China tensions

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Gold’s post-Federal Reserve rally continued on Tuesday, with the yellow metal and other safe-haven assets ending higher after U.S. House Speaker Nancy Pelosi landed in Taiwan, sparking vows of retaliation from Beijing.

Focus also was on comments from two top Federal Reserve officials who said a central bank pivot away from aggressive rate-hiking plans wasn’t likely until high inflation subsides.

How the market performed ?

Gold futures
GC00,
-0.36%

GCZ22,
-0.36%

expiring in December climbed $7.90, or 0.1%, to settle at $1,789.70 an ounce, booking a 5-session rise and the longest win streak for the most-active contract since April 13, according to Dow Jones Market Data.

Silver contracts
SI00,
-1.93%

SIU22,
-1.93%

expiring in September shed 6 cents, or 0.3%, to close at $20.14.

Platinum
PL00,
-0.99%

PLV22,
-0.99%

contracts expiring in October rose 0.4% to $905 per ounce, while palladium
PA00,
-6.32%

PAU22,
-6.32%

contracts expiring in September shed 5% to $2,090.20.

Copper prices
HG00,
-1.65%

HGU22,
-1.65%

retreated 0.7% to end at $3.5185 per pound.

What analysts are saying

Gold prices have surged nearly $100 per ounce in the past two weeks from their lowest level since early 2021, according to FactSet. Analysts credited the leg higher last week to Fed Chairman Jerome Powell’s comments that the pace of interest rate hikes likely would slow.

On Tuesday, however, San Francisco Federal Reserve Bank President Mary Daly said the central bank is “no where near” being done in its fight against inflation, in a CNBC interview.

Chicago Fed President Charles Evans also said Tuesday that he hoped the pace of rate hikes would be slower later in the year, but echoed Daly in saying it would depend on whether inflation, at 9.1% in June, begins to slow.

See: Top Fed officials say U.S. interest rates to keep rising until high inflation eases

The fresh Fed commentary added fuel to debate around if investor bets on a central bank pivot away from its tighter monetary policies could go awry.

See: Did the stock market peer through ‘rose-colored glasses’ as tech surged in July?

Gold and other safe-haven assets also benefited Tuesday from a different tailwind: House Speaker Nancy Pelosi’s visit to Taiwan.

Pelosi’s trip, coming in the wake of a tense and “candid” phone call between President Biden and President Xi Jinping, revived fears of strained bilateral relationships between Washington and Beijing.

“Rising tensions amongst the two world largest economies won’t support risk appetite anytime soon,” said Edward Moya, senior market analyst at Oanda, in emailed comments. 

The dollar
DXY,
+0.72%

was 0.7% higher against a basket of rival currencies, while U.S. equities mostly retreated, with the S&P 500 index
SPX,
-0.39%

0.3% lower at last check Tuesday. The 10-year Treasury yield
TMUBMUSD10Y,
2.744%

also was higher by 12 basis points to 2.73%.

Climbing gold prices followed a strong July for stocks and other risk assets. Against that backdrop, precious metals funds saw $4 billion of outflows last month, with gold-related exchange-traded funds shedding $2.7 billion, according to a State Street Global Advisors report.

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