Gold futures declined on Tuesday, with expectations for more interest-rate hikes by the Federal Reserve and strength in the U.S. dollar and Treasury yields prompting prices for the precious metal to reduce their gain for the year.
Price action
- Gold for April delivery GC00, -0.40% GCJ23, -0.40% fell $7.70, or 0.4%, to settle at $1,842.50 an ounce on Comex, with prices for the most-active contract trading 0.9% higher year to date, according to Dow Jones Market Data.
- March silver SI00, +0.64% SIH23, +0.64% gained 18 cents, or 0.8%, to $21.89 per ounce.
- Palladium for March delivery PAH23, +2.51% rose $28.20, or 1.9%, to $1,520.70 per ounce, while April platinum PLJ23, +2.73% gained $27.20, or nearly 3%, to $948.60 per ounce.
- March copper HGH23, +2.52% added 12 cents, or almost 2.9%, to $4.2255 per pound.
Market drivers
Shifting expectations about the Fed’s plans have caused gold to trim its year-to-date gain as the U.S. dollar and Treasury yields have moved higher.
U.S. markets were closed Monday for the Presidents Day holiday, but after posting losses in each of the last three weeks, they are poised to register their first monthly loss in four months.
“It has been a rough month for gold so far thanks to the strong jobs and hot inflation data from the United States pushing up Treasury yields,” said Lukman Otunuga, manager of market analysis at FXTM. Hawkish comments from Federal Reserve officials “rubbed salt into the wound.”
Given how the precious metal is “en route to experiencing its first monthly loss since October 2022, bulls need to get their mojo back, but a hawkish set of Fed minutes [due out Wednesday] will most likely add insult to injury, potentially dragging prices toward $1,800,” he said in market commentary. “Such a development may invite further downside in the short to medium term.”
A stronger dollar, following a pair of S&P surveys that revealed the U.S. shows signs of a rebound in February, also weighed on gold by making the yellow metal more expensive for buyers in other currencies.
The ICE U.S. Dollar Index DXY, +0.30%, a measure of the buck’s strength against a basket of rivals, rose 0.3% to 104.21.
