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Metals Stocks: Gold, silver settle lower after last week’s steep losses

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Gold and silver prices settled higher on Monday to recoup part of last week’s steep losses, finding support from a pull back in the U.S. dollar.

Price action

Gold futures
GCZ23,
+1.01%

for December delivery added $15.10, or 0.9%, to settle at $1,664 per ounce on Comex. On Friday, the December contract settled at $1,648.90 an ounce, the lowest end-of-day level for a most-active contract since Sept. 27.

December silver
SIZ22,
+2.76%

climbed 65 cents, or 3.6%, to $18.719 per ounce after falling nearly 11% last week.

Palladium futures
PAZ22,
-0.24%

for December climbed $2.60, or 0.1%, to $1,999.90 per ounce, while January platinum
PLF23,
+2.06%

increased by $18.70, or 2.1%, to $913.60 per ounce.

December copper
HGZ22,
-0.60%

edged down by a penny, or 0.2%, to $3.4155 per pound.

What’s happening

Even as gold prices rebounded on Monday, hopes for a durable rebound for the yellow metal — and, increasingly, other commodities as well — dimmed as investors anticipate the Federal Reserve will continue hiking interest rates into the first quarter of 2023, potentially exacerbating an expected global economic slowdown.

“The factor that influences the price of gold the most is the dollar index,” said Naeem Aslam, chief market analyst at AvaTrade. “It is pretty much clear that the Fed will continue to increase its interest rate, and there are no signs of them slowing down their monetary policy any time soon,” he said in emailed commentary.

In Monday trading, however, the ICE U.S. Dollar index
DXY,
-1.08%

was down 1.1% at 112.056, and U.S. Treasury yields also eased back, after the New York Fed’s Empire State business conditions index revealed a fall of 7.6 points to negative 9.1 in October.

Lower global yields and a slightly softer dollar are likely behind the move higher for gold, “with traders no doubt hoping that peak inflation and rate pricing are nearly in sight,” said Craig Erlam, senior market analyst at OANDA, in a daily note.

Overall, the “recent economic data hasn’t offered cause for much optimism but that could change over the coming months, with central banks now surely not far from their terminal rates,” he said. “That could favour gold, especially as the economy falters.”

Resistance for prices ahead could be found around $1,680 and $1,700, although some traders may be “encouraged by the failure to breach September’s lows,” said Erlam.

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