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Metals Stocks: Gold ends lower, a day after posting the highest settlement since June

Gold futures took a breather Thursday, with prices settling with a loss a day after the most-active contract marked its highest settlement June.

“Gold prices have been soaring for the last number of weeks and it is natural  for traders to book some profit,” Naeem Aslam, chief market analyst at AvaTrade, told MarketWatch.

December gold
GCZ21,
-0.53%

GC00,
-0.53%

 fell $8.80, or 0.5%, to settle at $1,861.40 an ounce, following a 0.9% gain on Wednesday, which took the precious metal to the highest finish since June 11, FactSet data show.

December silver
SIZ21,
-1.14%

SI00,
-1.14%
,
meanwhile, lost 27 cents, or 1.1%, to end at $24.90 an ounce, following a 0.9% gain on Wednesday.

Read: The spotlight shines on ‘green’ metals such as lithium and cobalt as EV popularity climbs

Despite the decline in gold prices Thursday, “we don’t think that investors are worried about any major retracement in gold prices as the recent plunge, which took place on the back of the [Federal Reserve] tapering, wasn’t significant,” Aslam said. “Prices are likely to move higher in a gradual manner from here onwards.” 

The pullback in the precious metals Thursday came even as typical headwinds for bullion, a rising dollar and higher yields for government debt, were receding. A weaker dollar can lift the appeal of owning dollar-priced assets for foreign buyers and lower yields reduce the opportunity costs of buying gold over Treasurys, which are considered risk free.

“Gold has struggled to sustain its breakout from last week, with prices coming under pressure due to the rallying U.S. dollar and [Treasury] yields on the front-foot for most of the week,” said Fawad Razaqzada, market analyst at ThinkMarkets. “The downside should be limited for as long as inflation concerns remain the main focal point,” he said, adding that he expects “dip buyers to step in on any short-term weakness.”

Key support for gold comes in at around $1,830, where gold had previously found strong resistance, he said. There should be “many willing buyers around that area for as long as yields do not rise significantly.”

Worries about surging inflation, caused primarily by supply-chain bottlenecks and a rapid increase in demand in the recovery phase of the COVID-19 pandemic, has helped to bolster bullion values in recent weeks.

But it is unclear how much further the precious metal can climb as lower-bound bond yields compel investors to dial up risk taking, drawing some appetite away from precious metals.

Gold prices pared some of their losses, only briefly, immediately following data showing that new filings for jobless benefit slipped by 1,000 to 268,000 in the seven days ended Nov. 13.

Separately, the Philadelphia Fed said Thursday its gauge of regional manufacturing activity rose to 39 in November from 28.3 in the previous month.

In other Comex trading, December copper
HGZ21,
+1.16%

tacked on 0.9% to $4.305 a pound. December platinum
PLF22,
-1.43%

declined by 1.2% to $1,056.40 an ounce, while December palladium
PAZ21,
-2.36%

fell 2.2% to $2,137.40 an ounce.

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