Gold prices end at highest since April after back-to-back losses

Gold futures gained on Thursday, with prices climbing to their highest since April, after back-to-back losses, as traders monitored indications of a slowdown in U.S. inflation.

Price action
  • Gold for February delivery
    rose $16.90, or 0.9%, to settle at $1,923.90 an ounce on Comex. That was the highest most-active contract finish since April 22, FactSet data show.

  • March silver
    added 22 cents, or 0.9%, to $23.87 an ounce.

  • April platinum
    shed nearly 0.3% to $1,041.10 an ounce, while March palladium
    added 3.7% to $1,768.50 an ounce.

  • March copper
    edged down less than 0.1% to $4.2315 a pound. Prices for the most-active contract had posted a ninth straight session rise Wednesday, the longest winning streak since July 2020, according to Dow Jones Market Data.

Read: What’s behind copper’s impressive rise?

Market drivers

Gold managed to recoup its losses from the previous two sessions and then some.

Prices ended lower Wednesday, but touched the highest intraday level for a most actively traded contract since late April, with a fall in Treasury yields and a weaker U.S. dollar having helped set the stage for a gold rally.

“Gold is bid above the $1,900 level, and the positive pressure is supported by lower U.S. yields — which decrease the opportunity cost of holding the non-interest-bearing yellow metal, and the softer U.S. dollar,” said Ipek Ozkardeskaya, senior analyst at Swissquote Bank, in a note.

Treasury yields were up in Thursday dealings, but fell sharply on Wednesday, with the 2- and 10-year rates dropping to levels last seen in September, after U.S. data showed a larger-than-expected drop in December retail sales and a further slowdown in wholesale inflation.

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The U.S. dollar, which roared higher in 2022, has also been in retreat. A weaker dollar can be supportive to commodities priced in the unit, making them less expensive to users of other currencies.

“The fact that growth data in the U.S. is falling at a faster clip than inflation, combined with the explicitly hawkish [Wednesday] Fed chatter, proved to be enough to spark a wave of profit taking in gold yesterday,” analysts at Sevens Report Research wrote in Thursday’s newsletter.

Gold prices posted a so-called golden cross on Friday, which happens when a short-term moving price average crosses above a long-term moving average, potentially indicating a change in sentiment toward the metal.

Technically overbought conditions for gold following its recent rise “hint that we could see a minor downside correction in the short run, but levels between $1,855 and $1,900 are interesting for amassing gold,” said Ozkardeskaya.

“There is potential for a further rise in gold, especially if the stocks fall, while the U.S. yields continue easing,” he said.  

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