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Gold futures drifted lower Thursday, eyeing their lowest year-to-date finish, a day after minutes of the Federal Reserve’s latest policy meeting affirmed that policy makers expect to push rates higher and keep them there.
Price action
-
Gold for April delivery
GC00,
-0.75% GCJ23,
-0.75%
fell $5.20, or 0.3%, to $1,836 an ounce on Comex. A settlement around this level would be the lowest for a most-active contract since Dec. 30, FactSet data show. -
March silver
SIH23,
-1.65%
was down 0.2% at $21.63 an ounce. -
April platinum
PLJ23,
-0.59%
rose 0.5% to $958 an ounce. March palladium
PAH23,
-2.41%
was down 2% at $1,453 an ounce, while the June palladium contract
PAM23,
-2.69% ,
which is also among the most active, traded at $1,450.50, down nearly 2.6%. -
March copper
HGH23,
-2.77%
shed 1.1% to $4.146 a pound.
Market drivers
Minutes of the Fed’s Jan. 31-Feb. 1 policy meeting released Wednesday afternoon affirmed that policy makers were solidly behind plans to continue raising rates, but offered no major surprises.
The minutes “confirmed what last week’s strong inflation data already told us: we’re stuck with higher interest rates and a strong dollar — a structural headwind for our commodity markets,” analysts at Peak Trading Research wrote in a note sent to traders.
“ The minutes “confirmed what last week’s strong inflation data already told us: we’re stuck with higher interest rates and a strong dollar — a structural headwind for our commodity markets.” ”
Treasury yields and the dollar
DXY,
have risen since the beginning of February as market participants have boosted expectations for Fed interest-rate increases. Rising yields raise the opportunity cost of holding nonyielding assets like gold, while a stronger dollar makes commodities priced in the unit more expensive to users of other currencies.
“Rates and the dollar have been trending higher in recent weeks and if the hawkish money flows continue, the path of least resistance will be lower for gold,” wrote analysts at Sevens Report Research, in Thursday’s newsletter.
Still, data released Thursday showed that the U.S. economy grew slightly slower at a 2.7% annual pace at the end of 2022, according to revised government figures. The increase in gross domestic produce was reduced from an initial 2.9% growth rate.
Separately, the Labor Department reported that initial jobless claims fell by 3,000 to 192,000 in the week ending Feb. 18.
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