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Gold prices declined on Monday, briefly slipping below the key $2,000-an-ounce threshold for the first time in a week, following a Friday selloff that saw the most-active gold futures contract snap a streak of weekly gains.
Price action
-
Gold for June delivery
GC00,
-0.41% GCM23,
-0.41%
declined by $8.80, or 0.4%, to close at $2,007 an ounce on Comex after prices declined by 0.5% last week. The contract touched an intraday low of $1,993.30. -
May silver
SI00,
-1.34% SIK23,
-1.34%
shed 37.2 cents, or 1.5%, to finish at $25.197 an ounce. -
Palladium for June delivery
PAM23,
+4.26%
gained $64.20, or 4.3%, to settle at $1,560.50 an ounce. July platinum
PLN23,
+0.68%
rose by $5.60, or 0.5%, to $1,059.60 an ounce. -
May copper
HGK23,
-0.80%
lost 4.05 cents, or 1%, to end at $4.066 a pound.
Market drivers
Most-active gold futures hadn’t traded at intraday lows below the $2,000 mark since April 10, FactSet data show.
Gold has weakened as the greenback found support on the back of comments from Federal Reserve Gov. Christopher Waller, said Fawad Razaqzada, market analyst at StoneX.
Waller on Friday said the U.S. central bank needs to continue raising interest rates because inflation is “still much too high.” The ICE U.S. Dollar index
DXY,
was up 0.7% at 102.22 in Monday dealings. Strength in the dollar can weigh on dollar-denominated gold prices.
In addition to a stronger dollar, “gold has also been held back by a selloff in government bonds, causing bond yields to rise, which, in turn, has undermined zero-yielding assets like gold,” said Razaqzada.
Even so, “while the metal may well extend its drop in the short-term, my longer-term gold outlook remains positive,” he said. “I therefore envisage a rise to a new record high soon.”
Prices of both gold and silver touched their highest levels in more than a year last week, the latest milestone in a rapid rally that has seen the price of gold approach its strongest level ever.
Gold futures logged a record settlement price of $2,069.40 on Aug. 6, 2020, according to Dow Jones Market Data.
A decline in prices Friday led gold futures to post a loss for the week. The retracement in prices seen on Friday “cannot yet be seen as a proper inversion,” said Carlo Alberta De Casa, external market analyst at Kinesis Monday, in morning commentary. “After weeks of gains, it appears that a pullback to the key level of $2,000 is a pause which has a good chance of helping bullion to consolidate after the recent rally, finding new fuel for another bullish movement and restarting its journey to $2,075.”
This theory should be confirmed in the next few trading days, but Monday’s early trading appeared to support this, as “both gold spot and futures prices traded above $2,000,” he said.
In comments to MarketWatch, Razaqzada pointed out that gold recently reached a new record high against all other major currencies except the U.S. dollar.
“The fact that major central banks are at or near the peak means interest rates will fall back going forward and thus keep gold’s appeal intact as a haven asset,” he said.
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