Metals Stocks: Gold futures post 4th straight gain
Gold futures settled higher Tuesday, stretching their streak of consecutive gains to a fourth session, as inflation concerns and interest-rate expectations remained in focus.
There were many Federal Reserve speakers Monday and, “on balance, the tone remained largely dovish” as Fed Chairman Jerome Powell and Fed Vice Chairman Richard Clarida both reiterated that rate hikes won’t likely come until late 2022 or 2023, analysts at Sevens Report Research wrote in a Tuesday newsletter.
St. Louis Fed President James Bullard, in an interview with Fox Business Monday, said he expects the central bank to raise interest rates twice in 2022.
On the charts, “gold is attempting to breakout through resistance between $1,830 and $1,835, but futures have failed to do so four times since July and until we get a decisive breakout, the gold market will remain trendless,” said analysts at Sevens Report Research.
Read: Top Fed officials signal interest-rate increases in 2022 are on the table
December gold
GC00,
+0.33%
GCZ21,
+0.33%
climbed by $2.80, or nearly 0.2%, to settle at $1,830.80 an ounce, after trading as low as $1,821. Tuesday marked a fourth straight session rise for most-active gold futures, the longest run since a five-day rise ended July 7, according to Dow Jones Market Data. Prices settled at their highest since Sept. 3.
Silver for December delivery
SIZ21,
-0.64%
ended lower, losing 22 cents, or 0.9%, at $24.318 an ounce after posting a gain of 1.6% Monday.
Gold is seen on a bullish uptrend, particularly as inflation fears climb and the U.S. dollar has been somewhat subdued.
Wholesale prices in the U.S. surged again in October, with the producer-price index up 0.6% last month, offering little sign that the biggest increase in inflation in decades is going to peter out soon.
Treasury yields moved lower despite the surge in wholesale inflation data, with the 10-year Treasury yield
TMUBMUSD10Y,
1.438%
at 1.425%, down from 1.496% Monday. A fall in yields can lower the relative cost of owning gold, which doesn’t offer a coupon.
Naeem Aslam, chief market analyst at AvaTrade, said that “generally speaking, central banks around the world still seem to be accommodative, and in this case, investors are using their liquidity and excess cash to hold the precious metal to hedge against persistent inflation.”
The U.S. consumer-price index reading for October will be released Wednesday, with market expectations calling for a 0.6% rise.
Gold would need a daily close over $1,835 after the CPI release in order to target $1,900, and maybe even $2,000, said Chintan Karnani, director of research at Insignia Consultants. A close below $1,835 would “put bears in charge,” with $1,760 and $1,717 as short-term price targets.
After Wednesday’s CPI release, Karnani told MarketWatch that he’ll be watching expectations from Black Friday sales around Thanksgiving. Strong Black Friday sales will raise expectations for November jobs number, which are released in early December, he said.
“Every U.S. economic data release until Christmas will be scanned for [hints on] the next interest rate hike” by the Fed, he said.
Other Comex finished lower Tuesday, with December copper
HGZ21,
-0.60%
down 0.6% at $4.373 a pound.
January platinum
PLF22,
+0.37%
ended higher by 0.1% at $1,061.40 an ounce, but December palladium
PAZ21,
-2.61%
settled at $2,022.10 an ounce, down 2.7%.
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