Gold prices declined on Friday to notch back-to-back session losses, giving up gains from earlier this week that were driven by expectations for a down shift in the pace of Federal Reserve interest-rate hikes after next week’s meeting.
Price action
-
Gold for December delivery
GCZ22,
+0.21%
fell $20.80, or nearly 1.3%, to settle at $1,644.60 per ounce on Comex. Prices based on the most-active contract ended 0.7% lower for the week, after posting a gain of nearly 0.5% last week. -
Silver for December delivery
SIZ22,
+0.28%
shed 35 cents, or 1.8%, to $19.147 per ounce after ending last week 5.5% higher. It gained 0.4% this week. -
December palladium
PAZ22,
+0.20%
lost $41, or 2.1%, to $1,897.20 per ounce, to down 5.4% for the week, while January platinum
PLF23,
+0.04%
lost $18.30, or 1.9%, to $949.10 per ounce, with prices up 1.6% from a week ago. -
Copper for December delivery
HGZ22,
+0.09%
fell 9 cents, or 2.6%, to $3.429 per pound, logging a weekly loss of 1.3%.
What’s happening
Hopes that the Federal Reserve will follow through with smaller interest-rate hikes after its November policy meeting helped provide support to prices of gold and silver, but traders are still unsure whether “peak hawkishness” has truly passed.
Now, the ball is in the Fed’s court, and the fate of precious metals prices will largely depend on the central bank.
The point in time when we actually “reach peak hawkishness should present a good buying opportunity for gold as real rates should recede with an easier monetary policy stance,” analysts at Sevens Report Research said.
On Thursday, the European Central Bank doubled its benchmark rate, “reminding investors that while the trajectory of the interest rate curve may have eased off, it will continue to climb for a few months yet,” said Rupert Rowling, market analyst at Kinesis Money, in daily market comments.
““… this remains an environment where rates are still going up. As such, gold with its lack of dividend is unlikely to continue making significant gains and is more likely to consolidate around its current level of $1,650 an ounce.” ”
So while the prospect of the Fed, and other central banks across the world “being able to reduce their aggressive rate hikes earlier than initially feared has lent gold some light relief, this remains an environment where rates are still going up,” he said. “As such, gold with its lack of dividend is unlikely to continue making significant gains and is more likely to consolidate around its current level of $1,650 an ounce.”
The ICE U.S. Dollar Index
DXY,
a gauge of the buck’s strength against a basket of rivals, was up by 0.3% at 110.904, while 10-year Treasury yields
TMUBMUSD10Y,
were higher as U.S. data showed a key gauge of inflation rose by 0.3% in September.
