Gold and silver prices retreated on Wednesday as the U.S. dollar strengthened and Treasury yields advanced further beyond the 4% mark.
Price action
- Gold futures for December delivery GCZ23, -0.99% GC00, -1.04% fell $16, or 1%, to $1,639.80 per ounce on Comex. Prices for the most-active contract were on track to mark t heir lowest finish since Sept. 27, FactSet data show.
- December silver SIZ22, -1.02% shed 22 cents, or 1.2%, to $18.38 per ounce.
- December palladium futures PAZ22, -1.51% were down $28.90, or 1.4%, at $1,985 per ounce, while January platinum PLF23, -1.85% shed $16.40, or 1.8%, to $890.90 per ounce.
- Copper futures due in December HGZ22, -0.37% fell 2.6 cents, or 0.8%, to $3.3365 per pound.
What’s happening
Losses on Wednesday have pulled gold futures lower for the week.
“Truth be told, it was always going to be an uphill struggle for the metal,” said Fawad Razaqzada, market analyst at City Index and FOREX.com, in market commentary. “Fears over further tightening of central bank policy amid an environment of high-inflation and low-growth meant investors were never going buy gold aggressively.”
“Lo and behold, that’s how it proved again today, as the metal has broken down with the dollar rising,” said Razaqzada.
Precious metals analysts blamed hawkish commentary from Minneapolis Federal Reserve Bank President Neel Kashkari for the weakness in gold and silver prices on Wednesday. In remarks Tuesday afternoon, Kashkari said the Fed may need to hike interest rates past 4.75% to tame inflation.
Comments Kashkari were a stark reminder of the difficult macroeconomic environment gold finds itself in with central banks across the world looking to increase interest rates, further diminishing gold’s appeal due to its lack of yield, wrote Rupert Rowling, a market analyst for Kinesis Money.
The ICE U.S. Dollar Index DXY, +0.52%, a gauge of the greenback’s strength against a basket of rivals, rose 0.6% to 112.746.
Meanwhile the yields on the 2-year and 10-year Treasurys moved further past the 4% mark, with the 2-year TMUBMUSD02Y, 4.524% up 7.3 basis points to 4.520% and the 10-year up TMUBMUSD10Y, 4.089% 7 basis points to 4.0917%.