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Metals Stocks: Gold prices end higher as U.S. dollar and Treasury yields recede

Gold futures finished higher on Wednesday, with prices stretching their gains to a fourth-consecutive session to finish as the U.S. dollar and Treasury yields eased back, boosting the appeal of the haven metal.

Volatility in the metal’s prices could be explained by fluctuations in the U.S. dollar, “which also obviously has long and short-term ties to inflation,” said Adam Koos, president of Libertas Wealth Management Group, pointing out that investors are awaiting a reading on the U.S. consumer price index due out Thursday.

“Without hotter inflation numbers, as long as yields continue to rise, it’ll be difficult for the [dollar] alone to provide enough boost to steadily lift gold prices through the spring,” he told MarketWatch.

The rise in the metal’s prices came as the dollar pulled back, down 0.1%, as measured by the ICE U.S. Dollar Index DXY, -0.15% ; and yields for the 10-year Treasury note TMUBMUSD10Y, 1.929% were retreating to 1.92% after putting in the highest rate on Tuesday since July of 2019.

A weaker dollar, which precious metals tend to be priced in, and lower yields, usually helps to support buying in nonyielding commodities.

At last check, April gold  GCJ22, +0.34% GC00, +0.34% rose $8.70, or 0.5%, to settle at $1,836.60 an ounce, following a 0.3% rise on Tuesday, which marked the highest most-active contract settlement since Jan. 26, FactSet data show.

Thursday’s “pivotal” CPI inflation report “should tilt market expectations into either pricing anywhere between four to six” Federal Reserve interest rate hikes this year, said Edward Moya, senior market analyst at Oanda, in a market update.

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

Also see: Fed’s Mester wants faster pace of rate hikes than in last tightening cycle in 2015-2018

Gold prices may continue to trade in a range as inflation, rate hikes, the dollar, and interest rates all “try to determine which direction their paddling,” said Koos. “Some say that short-term gold price spikes could be due to tension in Ukraine — and that could be true — but I don’t think any geopolitical event is going to cause a lasting event on the price or price trend of gold.”

Meanwhile, some analysts, however, are remaining sanguine about gold purchases in the nearer term.

“Technically, the April gold futures bulls have the overall near-term technical advantage,” wrote Jim Wyckoff, senior analyst at Kitco.com, in a daily note.

The analysts said the next upside price objective for bullish investors in gold is to produce a close above solid resistance at the January high of $1,856.70 an ounce.

The Kitco analyst said bears’ next near-term downside price objective for gold is pushing futures prices below solid technical support at the December low of $1,755.40.

In other Comex metals trading, March silver SIH22, +0.43% added 14 cents, or 0.6%, at $23.341 an ounce, following a 0.5% gain for gold’s sister metal.

March copper HGH22, +3.89% tacked on 3.2% to $4.603 a pound, the highest most-active contract finish since October. April platinum PLJ22, +0.09% settled 0.1% higher at $1,037.40 an ounce and March palladium PAH22, +0.85% climbed by 0.9% to $2,285.10 an ounce.

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