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Gold futures closed higher Wednesday, bouncing after the lowest finish in three months, as traders digested a reading on inflation that came in hotter than expected.
Gold for June delivery
GC00,
GCM22,
rose $12.70, or 0.7%, to settle at $1,853.70 an ounce on Comex, booking its best daily percentage increase for the most-active contract since April 29, according to Dow Jones Market Data. The upswing came a day after it ended at its lowest since Feb. 10.
July silver
SIN22,
rose 15 cents, or 0.7%, to close at $21.575 an ounce, a day after finishing at its lowest since July 20, 2020.
The April consumer price index showed inflation at a 8.3% annual rate, down from 8.6% the previous month, according to government data. It marked the first time in five months the index hasn’t climbed at the fastest rate in 40 years, while also underscored the pain American households likely will feel for some time from price pressures.
Core prices, which exclude food and energy, gained 0.6%, up from a 0.3% advance in March, disappointing Wall Street.
“Today’s inflation report proves that Fed Chair Powell made a mistake last week when he removed the option of a 75-basis point rate hike at the next policy meeting,” Edward Moya, senior market analyst at Oanda, wrote in a note. “The overall takeaway for much of Wall Street however is that the Fed is still poised to deliver consecutive half-point rate increases at the June and July FOMC meetings.”
Read: Why inflation data was no ‘watershed moment’ for stock and bond-market investors
Gold has been under pressure as the U.S. dollar has rallied sharply versus its major rivals. A rally by the ICE U.S. Dollar Index
DXY,
eased up Wednesday after trading near a 20-year high. A stronger dollar can be a weight on commodities priced in the currency, as it makes them more expensive to users of other currencies.
Rising Treasury yields, which have backed off this week from 3 1/2-year highs, also can be a headwind for gold. Higher yields raise the opportunity cost of holding nonyielding assets.
“Gold and silver prices did back down a bit from their moderate gains seen just before the CPI report was released,” Jim Wyckoff, senior analyst at Kitco.com wrote in a note. “The data falls into the camp of the U.S. monetary policy hawks, who want to see a more aggressive pace of U.S. interest rate increases from the Federal Reserve.”
With “turmoil and uncertainty plaguing markets,” the dollar and commodities outside of gold and copper have held onto a positive trend, BofA Global researchers wrote, in a Wednesday client note. “Gold trend now sits at neutral after being positive most of the year.”
July copper
HGN22,
rose 1.3% to finish at $4.209 a pound.
July platinum
PLN22,
gained 4.5% to end at $989.80 an ounce, while June palladium
PAM22,
lost 1.8% to end at $2,007.90 an ounce.
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