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Metals Stocks: Gold prices trade at 2-month highs, on track for a third straight session gain

Gold futures climbed early Monday, with prices looking to stretch their streak of gains to a third consecutive session after settling last week at their highest since early September.

If prices for gold were going to drop, “they should have done so after the [Federal Open Market Committee] decision” last Wednesday, said Fawad Razaqzada, market analyst at ThinkMarkets. “Instead, they rallied into the close of the week, and look poised to make further gains — especially if the upcoming speeches by central bank officials continue to suggest monetary policy will not be tightened aggressively and that inflation is going to be transitory.”

Last week, the Bank of England was “doing the talking but failing to walk the walk as they refused to hike rates…despite indicating previously that they were likely to do so,” he said in note Monday. “On top of this, dovish rhetoric from the European Central Bank continued.”

Furthermore, the Fed’s decision Wednesday to taper its bond-buying program by $15 billion was “fully priced in, and presumably so too were the downside risks to gold and silver,” said Razaqzada.

“With several central bank officials speaking this week, let’s see if we will continue to hear more dovish rhetoric,” he said. If so, “this should be good news for stocks and gold, or risk assets in general. The big risk is if we see massive spike in US CPI inflation – unlikely, but not totally out of question.”

Gold for December delivery
GCZ21,
+0.37%

GC00,
+0.37%

 was up $7.30, or 0.4%, at $1,824.10 an ounce, following a 1.8% weekly gain, which drove the metal to the highest settlement for a most-active contract since Sept. 3, FactSet data show. Prices are on track to notch a third session gain in a row.

Read: Why gold has climbed in the wake of the Fed’s decision, but still trades lower for the year

A retreat in yields last week, which dragged down the yield for the benchmark 10-year Treasury note
TMUBMUSD10Y,
1.488%
,
used to price everything from mortgages to car loans, registered its steepest weekly fall since June 12, 2020, helping to pave the way for higher moves for bullion and other nonyielding precious metals.

The retreat in yields “breathed life back into gold prices, which hit a two-month high on Friday,” wrote Marios Hadjikyriacos, senior investment analyst at XM.com, in a daily note.

Data released Friday revealed that the U.S. created more jobs than expected, but a disappointing number of people chose to join the workforce last month and rising inflation dulled prospects for stronger economic growth.

U.S. companies added 531,000 jobs in October, with that increase almost double the number of job gains in September and well above the 450,000 new jobs expected by economists polled by The Wall Street Journal.

The Fed last week noted that it was prepared to make adjustments in the pace of its bond-buying program if “warranted by changes in the economic outlook,” raising some expectations that the central bank could lift rates at an accelerated pace if needed.

“Bullion has essentially turned into a trade on how quickly the Fed will pull the rate hike trigger, benefiting every time normalization expectations are pushed back and suffering each time they are brought forward,” wrote Hadjikyriacos.

Gold tends to be viewed as a hedge against inflation, which has been on the rise in the recovery phase of the COVID-19 pandemic.

In other Comex dealings, December silver
SIZ21,
+1.07%

SI00,
+1.07%

was trading 21.3 cents, or 0.9%, higher to $24.37 an ounce, after registering a weekly advance of 0.9% on Friday.

December copper
HGZ21,
+1.30%

tacked on 0.8% to $4.379 a pound. January platinum
PLF22,
+2.24%

rose 2.4% to $1,060.30 an ounce and December palladium
PAZ21,
+0.69%

traded at $2,038 an ounce, up 0.5%.

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