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Metals Stocks: Gold futures settle back below the key $1,800 mark

Gold futures declined on Tuesday, settling below $1,800 an ounce a day after posting a finish above that price level for the first time since mid-September.

Profit taking, along with a slight gain in the U.S. dollar and gold’s fall below the key $1,800 level, led to Tuesday’s gold-price selloff, Chintan Karnani, director of research at Insignia Consultants, told MarketWatch.

The dollar, as measured by the ICE U.S. Dollar index
DXY,
+0.14%
,
was up 0.2% after the Conference Board said Tuesday that the index of U.S. consumer confidence rose to 113.8 in October from a revised 109.8 in September.

“The threshold price is $1,800 for gold to continue its short term rally,” said Karnani.

In Tuesday dealings, December gold
GCZ21,
-0.75%

GC00,
-0.75%

 declined by $13.40, or 0.7%, to settle at $1,793.40 an ounce. That followed a 0.6% climb Monday, which brought prices for the most active contract to its highest settlement since Sept. 14, according to FactSet data.

Despite the decline in gold prices Tuesday, the uptrend “remains in place on the daily bar chart,” said Jim Wyckoff, senior analyst at Kitco.com, referring to a technical trading indicator. The “path of least resistance” for prices remains sideways to higher, he said.

December silver
SIZ21,
-1.98%

also settled at $24.088 an ounce, down 50 cents, or nearly 2.1%, a day after posting a 0.6% gain.

Bullion has been mostly supported by fears about persistent inflation around the world, with the precious metal viewed as a hedge against intensifying pricing pressures. However, expectations that the Federal Reserve will be forced to lift interest rates, which currently stand at a range between 0% and 0.25%, faster than earlier anticipated is likely to limit rallies for precious metals.

The Fed is slated to hold its two-day policy meeting Nov. 2-3, when it is widely expected to announce a tapering of bond purchases that were put in place during the worst of disruptions to financial markets sparked by the COVID-19 pandemic. Investors will be looking for any indication of the pace of that reduction in purchases as a signal of how rapidly the central bank might move to normalize interest rates.

“Gold prices jumped above the $1,800 level after yields on short-term Treasury bonds dropped after Jerome Powell, chairman of the Federal Reserve, indicated [on Friday] that inflation could persist longer than expected,” wrote Naeem Aslam, chief market analyst at AvaTrade, in a research note.

This update fueled “expectations of a sooner than expected interest rate hike to check surging commodity prices,” he wrote.

Also on Comex Tuesday, December copper
HGZ21,
-0.89%

fell by 0.9% to $4.486 a pound.

January platinum
PLF22,
-2.93%

dropped 2.9% to $1,032.90 an ounce and December palladium
PAZ21,
-2.57%

settled at $2,004.80 an ounce, down 2.1%.

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