By Myra P. Saefong and Joseph Adinolfi
Gold futures recovered some ground on Tuesday, finishing higher after back-to-back losses that left the yellow metal at its lowest level in two-and-a-half years.
Gold futures /zigman2/quotes/210039517/delayed GCZ22 -0.0056% for December delivery climbed $2.80, or 0.2%, to settle at $1,636.20 per ounce on Comex. Prices on Monday settled at $1,633.40, the lowest finish for a most-active contract since April 2020, FactSet data show.
Silver futures /zigman2/quotes/210319410/delayed SIZ22 +0.59% for December delivery fell 14 cents, or 0.8%, to $18.337 per ounce after trading as high as $18.785.
December copper /zigman2/quotes/210059544/delayed HGZ22 -0.30% lost a penny, or 0.3%, to $3.2835 a pound.
Palladium futures /zigman2/quotes/229904593/delayed PAZ22 +2.01% for December delivery climbed $41.40, or 2.%, to $2,090.40 per ounce.
Platinum futures for October delivery declined by $3.20, or 0.4%, to $846.90 per ounce.
“After sinking to its lowest level since April 2020 in the previous session, gold prices seem to be stabilising as the dollar rally pauses,” said Lukman Otunuga, manager, market analysis at FXTM, in a market update.
Even so, gold “remains under the mercy of a broadly stronger dollar and rising Treasury yields amid [Federal Reserve interest] rate hikes,” he said. “We may see high levels of volatility for gold over the next few days as the markets digest the flurry of speeches by numerous Fed officials.”
The ICE U.S. Dollar Index /zigman2/quotes/210598269/delayed DXY -0.16% , a gauge of the dollar’s strength against a basket of rivals, traded as low as 113.33 in Tuesday dealings, after topping 114 Monday to reach its highest level since 2002.
The move in the dollar followed data released Tuesday showing that orders at U.S. factories for long-lasting goods fell 0.2% in August. Separately, a survey of U.S. consumer confidence rose to a five-month high of 108 in September.
For gold, Tuesday’s rise was “hardly a rally and more likely a temporary bounce as selling pressure takes a break,” said Edward Moya, senior market analyst at OANDA, in emailed commentary. “Gold won’t bottom out until Wall Street feels they have a firm handle on how rates will go and right now, it seems rates will need to quickly get above current CPI levels.”
The strong U.S. dollar and rising Treasury yields have been weighing on gold prices all year thanks to expectations for more aggressive monetary policy tightening from the Fed and other global central banks. As a result, gold-focused exchange-traded funds have endured a massive capital exodus, according to Commerzbank analysts.
“Gold appears to have lost its role as a safe haven to the USD, which thanks to the Fed rate hikes is promising considerable returns again, at least in nominal terms,” the team said in a note to clients on Tuesday.
“ETF investors are responding by jettisoning their gold holdings in grand style. The gold ETFs tracked by Bloomberg registered outflows of 7.7 tons on Friday, followed by another 8.5 tons yesterday.”
On Tuesday, the SPDR Gold Shares ETF /zigman2/quotes/200593176/composite GLD +1.84% was up 0.4%, but down nearly 5% month to date.