Gold prices finished Wednesday at their lowest since late March, a day after settling below $2,000 an ounce for the first time in more than two weeks, as the yellow metal’s recent rally continued to unravel.
Price action
-
Gold futures for June delivery
GC00,
+0.45% GCM23,
+0.45%
declined by $8.10, or 0.4%, to settle at $1,984.90 per ounce on Comex after losing 1.5% on Tuesday. The settlement was the lowest for a most-active contract since March 29, according to Dow Jones Market Data. -
Silver futures for July delivery
SI00,
+1.11% SIN23,
+1.11%
settled at $23.90 per ounce, up a fraction of a cent. -
June palladium
PAM23,
+1.19%
shed $14.70, or 1%, to $1,484.90 per ounce, while July platinum
PLN23,
+0.44%
gained $15.70, or 1.5%, to $1,082.60 per ounce. -
Copper for July
HGN23,
+1.41%
gained 9 cents, or 2.4%, to $3.75 per pound.
Market drivers
Gold futures marked their lowest most-active contract settlement in seven weeks.
Shifting expectations about the Federal Reserve’s plans for interest rates as U.S. inflation has slowly declined have had an impact on gold since the beginning of the year, analysts said.
“The correction in gold has scope to continue if the odds of another Fed hike next month keep rising or rate-cut bets cool further,” said Marios Hadjikyriacos, senior investment analyst at XM, in emailed commentary shared with MarketWatch.
Some recovery in the U.S. dollar over the last couple of weeks has also weighed on the yellow metal. The ICE U.S. Dollar Index
DXY,
a gauge of the greenback’s strength against other major currencies, was up 0.2% at 102.80 in Wednesday dealings.
Still, “inflation expectations continue to retreat amid rising market worries
about the fallout from the debt ceiling debacle and ultimately a recession taking hold of the economy later this year,” analysts at Sevens Report Research wrote in Wednesday’s newsletter.
They said the “trend in gold remains bullish thanks to the latest run to fresh 2023 highs earlier this month, but price action and market internals have been markedly weak since mid-March and the threat of a breakdown towards $1,900 [an ounce] or even beyond is increasing.”
Meanwhile, copper futures climbed Wednesday, with prices erasing the 2.2% loss they suffered Tuesday, when they settled at the lowest since late November.
Copper declined Tuesday as “disappointing economic data out of China weighed on the prospects that a big rebound in Chinese growth would help keep the global economy afloat despite widely held recession fears on Wall Street,” the Sevens Report analysts said.
Strong retail sales data in the U.S. on Tuesday also “bolstered the case for continued aggressive and restrictive Fed policy measures in the months ahead, which will continue to choke off growth, and are more likely to result in a hard landing,” they said.
Read: China’s reopening recovery is running out of steam and starting to worry financial markets
The bottom line is “weakness in the price of copper almost never coincides with a strong global economy or sustainable gains in risk assets, which is the latest anecdotal signal that cracks are already emerging in the economy and further pain is becoming increasingly likely,” the Sevens Report analysts said.
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