Gold prices declined Thursday following a three-day winning streak as strength in the U.S. dollar weighed on the yellow metal.
Price action
-
Gold futures for April delivery
GC00,
-0.08% GCJ23,
-0.08%
fell by $2.40, or 0.1%, to $1,843 per ounce on Comex after rising for three straight sessions through Wednesday. Prices marked a monthly decline of 5.6% for February, the largest monthly loss for a most-active contract since June 2021, according to FactSet data. -
Silver futures for May delivery
SI00,
-0.45% SIK23,
-0.45%
fell by 19 cents, or 0.9%, to $20.905 per ounce. -
Palladium futures for June
PAM23,
-0.18%
declined by $11.10, or 0.8%, to $1,426.50 per ounce, while platinum futures for April
PLJ23,
+0.05%
fell by $3.60, or 0.4%, to $958.20 per ounce. -
Copper for May delivery
HGK23,
-1.72%
fell by 8.8 cents, or 2.1%, to $4.0725 per pound.
Market drivers
After finding support from a combination of strong Chinese economic data and a brief pullback in the U.S. dollar, gold prices were under pressure once again on Thursday.
“Gold is snared in a U.S. dollar-driven regime but continues to find dip buyers as a hedge against a re-inflation of geopolitical risk premium,” said Stephen Innes, managing partner at SPI Asset Management.
The ICE U.S. Dollar Index
DXY,
a measure of the greenback’s strength against a basket of rivals, gained 0.5% to 105.014 in Thursday dealings.
Brien Lundin, editor of Gold Newsletter, pointed out talk surrounding a change in the investor consensus “from a looming end to rate hikes to higher for (much) longer” that had sent gold and silver reeling. Prices for gold, however, managed to post three consecutive session gains, while silver marked a back-to-back climb through Wednesday.
The recent rise is “encouraging — and a sign that the very bearish sentiment of February may be abating, at least for gold,” he wrote in his February newsletter.
He believes “the pendulum had swung far too far toward the belief that the [Federal Reserve] would be hiking rates well into the summer.”
There are still three factors that are likely to force the Fed to “bring its rate-hike crusade to a screeching halt in the week ahead,” he said. Those are something “breaking” in the stock or bond markets, the upcoming recession, and the soaring costs of servicing the federal debt at higher interest rates.
Lundin said his “original thesis going into this year, of a Fed looking for its first chance to pause and let the lagging effects roll in, may end up being delayed by a month or two, but certainly not until mid-year.”
He believes recent inflation reports “support my view that the Fed will have to pause, and eventually pivot, without having gotten inflation near its 2% target.”
That scenario, “with a more-dovish Fed yet still-persistent inflation, would be more bullish for gold than any other asset class,” said Lundin.
