Gold and silver prices bounced back on Monday from last week’s steep losses as the U.S. dollar softened.
Price action
- Gold futures GCZ23, +1.05% for December delivery advanced $21, or 1.3%, to $1,669.90 per ounce on Comex. On Friday, the December contract settled at $1,648.90 an ounce, the lowest end-of-day level for a most-active contract since Sept. 27.
- December silver SIZ22, +3.23% climbed 64.4 cents, or 3.6%, to $18.715 per ounce after falling nearly 11% last week.
- Palladium futures PAZ22, +0.44% for December climbed $26.20, or 1.3%, to $2,023.50 per ounce, while January platinum PLF23, +2.42% increased by $25.90, or 2.9%, to $920.80 per ounce.
- December copper HGZ22, +0.03% increased by 2.3 cents, or 0.7%, to $3.4465 per pound.
What’s happening
Even as gold prices rebounded on Monday, hopes for a durable rebound for the yellow metal — and, increasingly, other commodities as well — are dimming as investors anticipate the Federal Reserve will continue hiking interest rates into the first quarter of 2023, potentially exacerbating an expected global economic slowdown.
“The factor that influences the price of gold the most is the dollar index,” said Naeem Aslam, chief market analyst at AvaTrade. “It is pretty much clear that the Fed will continue to increase its interest rate, and there are no signs of them slowing down their monetary policy any time soon,” he said in emailed commentary.
In Monday trading, however, the ICE U.S. Dollar index DXY, -0.96% was down 0.8% at 112.446, and U.S. Treasury yields also eased back, after the New York Fed’s Empire State business conditions index revealed a fall of 7.6 points to negative 9.1 in October.
Lower global yields and a slightly softer dollar are likely behind the move higher for gold, “with traders no doubt hoping that peak inflation and rate pricing are nearly in sight,” said Craig Erlam, senior market analyst at OANDA, in a daily note.
Overall, the “recent economic data hasn’t offered cause for much optimism but that could change over the coming months, with central banks now surely not far from their terminal rates,” he said. “That could favour gold, especially as the economy falters.”
Resistance for prices ahead could be found around $1,680 and $1,700,” although some traders may be encouraged by the failure to breach September’s lows,” said Erlam.