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Metals Stocks: Gold logs 7th straight monthly decline — its longest losing streak in 40 years

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Gold futures ended lower Monday and also booked a seventh straight monthly loss, the longest such streak based on most actively traded contracts since 1982, according to Dow Jones Market Data.

Higher Treasury yields and a stronger dollar continued to weigh on precious metals prices, ahead of the Federal Reserve’s monetary policy statement Wednesday, when the central bank is expected to announced a sharp rise in interest rates.

Price action

Gold for December
GCZ22,
-0.54%

GC00,
-0.54%

delivery fell $4.10, or nearly 0.3%, to $1,640.70 per ounce on Comex. Based on the most-active contracts, the yellow metal lost 1.9% for the month, down a seventh straight month for the longest stretch of such losses since a seven-month decline ended in March 1982, according to Dow Jones Market Data.

Silver for December delivery
SIZ22,
-0.38%

shed 3 cents, or almost 0.2%, to $19.119 per ounce, with prices edging up 0.4% for the month.

December palladium
PAZ22,
-3.23%

fell $65.50, or about 3.5%, to $1,831.70 per ounce, posting a fall of 16.1% for the month, while January platinum 
PLF23,
-2.01%

retreated $19, or 2%, to $930.10 per ounce, but was up 8.3% for the month.

Copper for December delivery
HGZ22,
-1.55%

shed 5 cents, or 1.6%, to $3.375 per pound, with prices marking a monthly loss of 1.1%.

What’s happening

“Gold remains a prisoner of the dollar ahead of Wednesday’s Fed decision, and then the non-farm jobs data on Friday,” Adrian Ash, director of research at BullionVault, told MarketWatch.

Bullion has been particularly sensitive to moves in the U.S. dollar and a rise in government debt yields, which can undercut appetite for precious metals. The ICE U.S. Dollar Index
DXY,
+0.78%
,
a gauge of the dollar’s strength against a basket of rivals, rose 0.7% to 111.575. The yield on the 10-year Treasury note
TMUBMUSD10Y,
4.094%

rose 2 points to 4.037%.

But traders will need to wait until Wednesday for the highlight of this week’s event calendar, which is the November meeting of the Federal Reserve’s policy-setting committee, market analysts said.

Read: Another jumbo Fed rate hike is expected this week — and then life gets difficult for Powell

Some investors remain skeptical about the Federal Reserve potentially pivoting to a more dovish stance on Wednesday, said Fawad Razaqzada, market analyst at City Index and Forex.com. The Fed will announce its interest-rate decision on Wednesday afternoon. A 75 basis-point rate hike is almost certain, but “it is not fully priced in,” he said.

So if the central bank hikes by 75 basis points, that will “disappoint those who were looking for a smaller increase, and thus may cause a bit of a downward move in stock and gold prices,” said Razaqzada. “A 50 bps hike should have the opposite impact.”

“The market is even more unsure about what type of a signal the Fed will provide in terms of future rate hikes,” he said.

Investors will hear from Fed Chairman Jerome Powell at the end of the two-day meeting on Wednesday, and are looking for signs to reinforce expectations that the central bank will shift to smaller interest-rate hikes after delivering what’s expected to be a fourth jumbo rate hike of 75 basis points.

“Markets are already trying to look beyond the New Year to a likely [Fed] pivot sometime in the spring,” said BullionVault’s Ash.

“For gold, the slow bleed out of gold [exchange-traded funds] and the bearish turn in Comex speculation may very well continue until the Fed or the data signal a change of direction,” he said. “Against those headwinds, consumer demand looks more than able to absorb those outflows, with last week’s strong Diwali festival in India now followed by Christmas gifting in the West, and then Lunar New Year in China.”

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