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Metals Stocks

May 19, 2022, 1:56 p.m. EDT

Gold futures end higher, book best daily gain in a month as inflation weighs on stocks

By Joy Wiltermuth and Steve Goldstein

Gold futures closed higher Thursday, recording their best daily gain in about a month, as the yellow metal benefited from risk aversion in the wake of the worst day for U.S. stocks in nearly two years on Wednesday.

Gold futures (NYM:GC00) rose $25.30, or 1.4%, to settle at $1,841.20 an ounce, the best daily percentage rise for the most-active contract since April 12, according to Dow Jones Market Data. Silver (NYM:SI00) for July delivery gained 1.7% Thursday to settle at $21.908 an ounce.

In U.S. stocks, the Dow Jones Industrial Average (DOW:DJIA) was lower again Thursday, a day after it and the S&P 500 index (S&P:SPX) booked their worst days in since June 2020, as investors worried about inflation cutting into margins at big-box retailers and perhaps beyond.

“An economic recession in the U.S. is now on the minds of traders and investors who were already saddled with other concerns, including the Russia-Ukraine war and Covid cases causing major cities in China to be on lockdown, which is disrupting global trade,” Jim Wyckoff, senior analysts at Kitcom.com wrote Thursday. “A lower U.S. dollar index and a decline in U.S. Treasury yields on this day are also working in favor of the metals market bulls.”

Gold has been basically flat this year as the S&P 500 (S&P:SPX) has dropped about 18%.

Analysts at HSBC Global Private Banking said the current environment is one that’s mixed for gold.

“Gold of course typically behaves differently from the more cyclical commodities, and the rising real rate and strong dollar are headwinds for gold, while the mixed risk appetite is a tailwind,” the firm said in its second-half investment outlook, which is neutral on the yellow metal and bullish toward the dollar.

The U.S. ICE dollar index (IFUS:DXY) fell 1% on Thursday to around $102.79,  a gauge of the currency against a basket of six major rivals. A stronger dollar can be a negative for commodities priced in the unit, making them more expensive to users of other currencies.

In other metals trade, July copper  rose 2.5% to settle at $4.2830 a pound.

July platinum gained 3.2% to end at $953.70 an ounce, while June palladium fell 0.7% to end at $1,978.40 an ounce.

Link to MarketWatch's Slice.