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Metals Stocks: Gold marks longest streak of gains since November after higher than expected U.S. inflation reading

Gold futures ended higher for a fifth session in a row Thursday, shaking off earlier weakness to mark their longest streak of gains since November, after a reading on January U.S. inflation came in higher than expected.

The consumer price index rose 0.6% in January to 7.5%, holding ground at a 40-year high. The 7.5% surge in the cost of living in the past 12 months is the biggest since February 1982.

Gold moved lower shortly after the CPI data, but then gradually moved up, stretching their streak of gains into a fifth consecutive session, the longest since the seven-session rise seen in November, according to Dow Jones Market Data.

Prices found support at their 18-day moving average of $1,820, Peter Spina, president and chief executive officer at GoldSeek.com, told MarketWatch.

“There is simply too much buying in gold recently to get any sustained corrections,” he said. “Gold simply is refusing to fall below $1,800.”

““There is simply too much buying in gold recently to get any sustained corrections.””

— Peter Spina, GoldSeek.com

Spina also said “reported ‘whale’ buying up physical under $1,800,” which he believes to be the Russians — specifically the Russian National Wealth Fund.

He said Bloomberg reports that the rise in crude oil prices may create a windfall gain for Russia in 2022 of about $65 to $73 billion dollars with oil at $90 to $100. The law “requires that the vast majority of these funds to be invested into a rebalanced portfolio,” said Spina.

“It is my belief that the big buyer in gold is this fund, which is a reflection of the strong tradition of gold demand flow from oil profits,” he said. “These very high oil prices will only add more fuel to the gold demand story in the coming year.”

April gold futures
GC00,
-0.19%

GCJ22,
-0.19%

edged up by 80 cents, or less than 0.1%, to settle at $1,837.40 an ounce on Comex, with most-active contract prices marking another finish at the highest since Jan. 25. March silver rose 18 cents, or 0.8%, to $23.522 an ounce.

Immediately following the inflation data, the U.S. dollar was “injected with renewed confidence, while Treasury yields climbed,” Lukman Otunuga, manager, market analysis at FXTM, told MarketWatch, pressuring prices for haven gold. The 10-year Treasury yield
TMUBMUSD10Y,
2.028%

touched highs above 2%, though The ICE U.S. Dollar index
DXY,
-0.02%

eased back by 0.1% to 95.394, after trading as high as 96.

The inflation data “certainly raises the prospects of the [Fed] raising interesting rates aggressively to battle inflation, a move that will most likely punish zero-yielding assets like gold,” said Otunuga.

“Bears remain on the prowl and could be waiting for the right opportunity to pounce, which could send the precious metal tumbling back towards the $1,800 level and lower in the short to medium term,” he said.

Read: High inflation has jacked up the cost of food, gas, cars and rent – and there’s little relief in sight

However, in a market update, Fawad Razaqzada, market analyst at ThinkMarkets, said gold’s rise “underscores its status as safe-haven commodity, and an effective inflation hedge.”

In other metals trading on Comex, March copper
HGH22,
+0.59%

tacked on 1.2% to about $4.66 a pound. April platinum
PLJ22,
-0.36%

added 0.5% to $1,042.50 an ounce, but March palladium
PAH22,
-1.16%

settled at $2,265.30 an ounce, down 0.9%.

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