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Gold futures climbed on Wednesday, buoyed by a softer U.S. dollar ahead of comments from Federal Reserve Chairman Jerome Powell, with prices for the precious metal poised to mark their first monthly gain since March.
Price action
-
Gold prices for February delivery
GC00,
+0.20% GCG23,
+0.20%
rose $8.50, or 0.5%, to $1,722.20 per ounce on Comex. Prices were on track to post a monthly gain of around 7%, their first since March and largest monthly percentage rise since May 2021, FactSet data show. -
Silver prices for March delivery
SIH23,
+1.91%
rose 62.4 cents, or 2.9%, to $22.06 per ounce, trading more than 14% higher for the month. -
January platinum
PLF23,
+3.26%
was up $38.10, or 3.8%, at $1,046.70 an ounce, while March palladium
PAH23,
+2.00%
climbed $80.10, or 4.4%, to $1,914 an ounce. -
Copper for March delivery
HGH23,
+2.56%
rose 11.7 cents, or 3.2%, to $3.7565 per pound.
Market drivers
Prices of commodities including gold, copper and crude oil were higher Wednesday as protests in China have prompted authorities there to ease some of their COVID-19 restrictions slightly, market strategists said.
There’s also hope that Powell’s commentary on Wednesday might support gold by hinting at a less aggressive pace of interest-rate hikes going forward.
“Traders and investors will be watching to see if Powell makes a pivot from a hawkish to a bit more dovish U.S. monetary policy stance, given recent U.S. economic data that hints inflation may have peaked,” said Jim Wyckoff, senior analyst at Kitco.com.
Powell is scheduled to speak at the Brookings Institution at 1.30 p.m. Eastern, which is also the settlement time for gold futures on Comex.
Monthly move
For the month of November, gold prices found support from a “significantly weaker” U.S. dollar, and a “notably lower” 10-year Treasury rate, Jeff Klearman, portfolio manager at GraniteShares, which runs the GraniteShares Gold Trust
BAR,
told MarketWatch.
The 10-year Treasury note yield
TMUBMUSD10Y,
was down by 7.6% this month. The ICE U.S. Dollar Index
DXY,
a measure of the currency’s strength against a basket of rivals, was down 0.4% at 106.42 in Wednesday dealings, and trades around 4.6% lower for the month. Weakness in the dollar tends to decrease the opportunity costs for investors considering dollar-priced gold as an option versus other perceived havens.
Declines in the dollar and 10-year Treasury rate can be “attributed to growing expectations of a less aggressive Fed going forward, fueled by lower (better)-than-expected PPI and CPI releases and less-hawkish statements in the FOMC minutes released last week,” said Klearman.
Meanwhile, “increased concerns surrounding the Russia-Ukraine war…, weak Chinese economic activity powered by China’s zero-COVID policy, as well as recent protests by Chinese citizens, also have contributed to gold’s rise in price,” he said.
Silver has outperformed gold this month, driven by the same factors affecting gold, but silver tends to be more volatile than gold, rising and falling at faster rates, said Klearman. Also, industrial and physical investment demand has increased and is expected to further increase, while mining output is not forecasted to increase.”
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