Gold prices settled at their highest level in six weeks on Tuesday, as weakness in the U.S. dollar and lower Treasury yields helped keep prices of precious metals and commodities elevated.
Price action
-
Gold futures for August delivery
GC00,
-0.01% GCQ23,
-0.01%
gained $24.40, or nearly 1.3%, to settle at $1,980.80 per ounce on Comex. Prices for the most-active contract settled at the highest since June 6, FactSet data show. -
Silver futures for September delivery
SI00,
+0.47% SIU23,
+0.47%
rose by 24 cents, or almost 1%, to $25.26 per ounce. -
October platinum
PLV23,
-0.23%
added $6.90, or 0.7%, to $994.40 per ounce, while palladium for September
PAU23,
-0.19%
rose by $35.40, or 2.8%, to $1,316.50 per ounce. -
Copper futures for September
HGU23,
-0.78%
declined by a penny, or 0.4%, to $3.83 per pound.
Market drivers
Gold futures trade higher week to date and were poised to end higher for the month.
Recent gains for the precious metal have been triggered by the U.S. dollar falling sharply last week amid expectations that the Federal Reserve is “close to reaching the end of its rate-hiking cycle, after both CPI and PPI measures of inflation came in weaker than expected,” said Fawad Razaqzada, market analyst at City Index and Forex.com.
Gold prices have recovered in the past week from three month lows following the release last Wednesday of the U.S. consumer-price index for June which was heralded by market analysts as a possible inflection point in the Federal Reserve’s battle against inflation. Last week’s U.S. CPI report showed consumer prices grew by just 0.2% in June, the slowest monthly pace since August 2021.
As a result, the prices of gold, silver and other commodities like crude oil have risen, bolstered by a softer U.S. dollar and lower Treasury yields. Lower Treasury yields make assets like gold, which doesn’t offer investors a yield, more attractive by comparison.
Data Tuesday showing weaker U.S. retail sales and industrial production data further fueled expectations for and end to the Fed’s rate-hiking cycle, causing Treasury yields to fall, which in turn “helped to support low- and zero-yielding assets, like gold and silver,” Razaqzada said in a market update.
Against that backdrop, the ICE U.S. Dollar Index
DXY,
a gauge of the dollar’s strength against other major currencies, was up 0.2% at 100.03 Tuesday, but is around 2.8% lower month to date. The 10-year Treasury yield
TMUBMUSD10Y,
fell by 2 basis points to 3.78%.
“Fresh volatility could be on the cards for gold over the next few days as investors focus not only on U.S. economic data but corporate earnings, which could influence overall sentiment,” said Lukman Otunuga, manager, market analysis at FXTM.
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