Metals Stocks

Aug. 18, 2022, 2:08 p.m. EDT

Gold prices log a 4th straight loss to end at a 3-week low

By Myra P. Saefong and Joseph Adinolfi

Gold futures gave up early gains on Thursday to suffer a fourth straight session loss, with prices settling at their lowest in three weeks on the back of strength in the U.S. dollar, as investors digested the latest economic data and minutes from the Federal Reserve’s July meeting.

Price action

  • Gold prices for December delivery (NYM:GCZ22) (NYM:GC00) fell $5.50, or 0.3%, to settle at $1,771.20 per ounce on Comex, following three consecutive sessions of declines. That was the lowest finish for a most-active contract since July 28, according to FactSet data.

  • Silver prices for September delivery were down 27 cents, or nearly 1,4%, at $19.464 per ounce.

  • Palladium prices for September delivery gained $12.70, or 0.6%, to $2,149.40 per ounce, while platinum futures for October delivery lost $14.40, or 1.6%, to $904.90 per ounce.

  • September copper  rose by 5 cents, or 1.3%, to $3.6315 per pound.

What analysts are saying

Prices for gold declined following data that revealed a weekly fall in U.S. jobless claims and strength in the U.S. dollar, said Jeff Wright, chief investment officer at Wolfpack Capital.  The ICE U.S. Dollar index (IFUS:DXY) traded 0.9% higher in Thursday afternoon dealings.

The minutes from the Federal Reserve’s July monetary policy meeting, released Wednesday afternoon, were “fairly neutral rather than potentially hawkish,” Wright told MarketWatch, but another 75 basis point rate increase is “quite possible, with 50 bps rate increase a certainty.”

The FOMC did use language to “return to data dependency in September,” and this alone contributed to U.S. dollar gains, he said. 

St. Louis Fed President James Bullard signaled his support for another large 75 basis point rate increase at the central bank’s September policy meeting, according to an interview with The Wall Street Journal published Thursday.

Read: Federal Reserve officials back moving interest rates higher in order to slow the economy, minutes show

The meeting minutes show that the Fed is planning additional rate hikes in the coming months, but “that the pace of hiking is likely to slow and that we’re closer to the end of the hiking cycle than the beginning,” Andrew Schrage, chief executive officer at Money Crashers, told MarketWatch.

“The downside price movement in gold in the hours following the FOMC suggests that gold markets are recalibrating for a lower-inflation environment,” he said. “We could see further downward price pressure as a result.”

Gold futures have now posted losses, and settled below the key psychological level of $1,800 an ounce, for four session sin a row.

A true shift away from 75 bps rate increases and quantitative tightening stalling out would make gold over $1,800 “feasible, but otherwise I think there is negative sentiment for gold,” said Wright. Prices may be at the “upper limits” of their range, and could slide back towards $1,700.

Link to MarketWatch's Slice.