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Sept. 29, 2022, 2:01 p.m. EDT

Gold prices end lower after brief BoE-inspired reprieve

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By Myra P. Saefong and Joseph Adinolfi

Gold futures settled slightly lower on Thursday, a day after rising to their highest level in nearly a week , as Treasury yields resumed their march higher following a precipitous pullback.

Price action

  • Gold futures for December delivery edged down by $1.40, or nearly 0.1%, to settle at $1,668.60 per ounce on Comex following a gain of 2.1% Wednesday.

  • December silver futures were down 17 cents, or 0.9%, to $18.712 per ounce.

  • December palladium rose $42, or 1.9%, to $2,211.10, while January platinum settled at $860.20 per ounce, down 60 cents.

  • Copper futures for December delivery climbed 6 cents, or 1.8%, to $3.418 per pound.

What’s happening

Gold received a brief reprieve on Wednesday, with prices ending that session higher, as U.S. stocks soared and Treasury yields recorded their biggest daily drop in more than two years following the Bank of England’s announcement that it would do “whatever it takes” to calm the gilt market, which boosted fixed income markets in Europe and the U.S.

See: Here are two reasons the Bank of England had to step in and buy bonds

Rupert Rowling, a market analyst at Kinesis Money, attributed gold’s retreat to the latest wave of hawkish rhetoric from senior Federal Reserve officials.

Read: Fed’s Mester cool to talk of potential ‘pause’ in rate hikes

“The Fed’s hawkish policy of raising interest rates has had a doubly negative impact on gold as not only has it made the non-yield bearing asset less attractive, it has also helped strengthen the U.S. dollar to record levels, which given gold’s typically inverse correlation with the greenback has exacerbated its decline,” Rowling wrote in an emailed note to clients.

In Thursday dealings, the 10-year Treasury yield /zigman2/quotes/211347051/realtime BX:TMUBMUSD10Y -1.60% rose nearly 6 basis points to 3.767%. The ICE U.S. Dollar index /zigman2/quotes/210598269/delayed DXY +0.11% edged down by 0.2% to 112.375, but trades more than 3% higher month to date.

The U.S. dollar move higher has been the strongest in over twenty years or more, as compared to the euro, pound, and yen, and has “outweighed the more traditional reasons to own gold in the short term” Michael Cuggino, president and portfolio manager of the Permanent Portfolio Family of Funds, told MarketWatch.

Still, he was upbeat on the outlook for the precious metal, referring to that condition as “probably unsustainable long term.” It will likely “ameliorate over time as global interest rates rise, allowing gold to resume its traditional role as a long duration asset against the growth of money and a hedge against uncertainty,” he said.

Cuggino added that while gold has seen a short term correction, declining year to date, “the current price presents a reasonable entry point for long-term investors who desire its benefits, despite no change in long-term fundamental reasons for owning it.”

add Add to watchlist BX:TMUBMUSD10Y
BX : Tullett Prebon
-0.07 -1.60%
Volume: 0.00
Dec. 6, 2023 5:00p
US : U.S.: ICE Futures U.S.
+0.12 +0.11%
Volume: 0.00
Dec. 6, 2023 6:05p

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