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Metals Stocks: Gold prices end higher, scoring a boost from a retreat in the U.S. dollar and bond yields

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Gold futures climbed early Tuesday, supported by a retreat in the U.S. dollar and Treasury yields, as investors bet on a less aggressive pace of interest-rate increases from the Federal Reserve starting in December.

Price action

Gold futures for December
GCZ22,
+0.42%

delivery rose $5, or 0.3%, to $1,659.10 per ounce on Comex.

December silver futures
SIZ22,
+1.05%

added 5.1 cents, or 0.3%, to $19.24 an ounce.

December palladium
PAZ22,
-2.43%

lost $48.80, or 2.5%, to $1,919 per ounce, while January platinum
PLF23,
-0.40%

fell $8.80, or 1%, to $917.80 per ounce.

Copper futures
HGZ22,
-0.69%

for December were down 2.9 cents, or 0.8%, to $3.402 per pound.

What’s happening

Traders say gold appetite is “likely to remain shaky as investors evaluate whether the Fed will indicate next week if it will remain hawkish,” after the central bank’s highly anticipated move to raise interest rates by another 75 basis points in November, with growing wagers of a more muted pace of increases thereafter, writes Lukman Otunuga, manager, market analysis, at FXTM.

For now, a pullback in the dollar against a basket of currencies provided support for dollar-denominated prices of gold. The ICE U.S. Dollar index
DXY,
-0.98%

was down 0.9% at 110.992. Dollar weakness tends to underpin appetite for commodities that are priced in the currency.

“ Swings in the gold market are currently being driven by the ups and downs of its long-time nemesis, the U.S. dollar,” Colin Cieszynski, chief market strategist at SIA Wealth Management, told MarketWatch.

“Investors should note, however, that relative to other currencies, such as the euro, pound and yen .., gold has outperformed and maintained its role as a store of value,” he said. This year, for example, “gold has remained a store of value, while the yen has collapsed to the point that multiple interventions by the Bank of Japan have been required to support it, with mixed success.”

A pullback in U.S. Treasury yields also buoyed gold prices, with the yield on the 10-year Treasury note
TMUBMUSD10Y,
4.091%

down more than 14 points at around 4.08%. Falling bond yields can decrease the opportunity costs of owning gold, compared against the perceived safety of government bonds.

Talking technicals, sustained gold-price weakness below $1,655 could open the doors toward $1,615 and $1,600 respectively, he said, while a breakout above $1,655 may trigger an incline towards $1,670 and $1,680.

Meanwhile, data from the nonprofit Conference Board showed Tuesday that a survey of U.S. consumer confidence fell to 102.5 in October — the first decline in three months, with the reading flashing warning signs about a recession.

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