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Metals Stocks: Gold prices hold ground at highest levels since August

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Gold prices held ground at their highest levels since August on Monday, with prices shaking off pressure from strength in the U.S. dollar and Treasury yields to inch higher, looking to extend last week’s rise of more than 5%.

Price action

December gold
GCZ22,
+0.28%

GC00,
+0.28%

rose $5.10, or 0.3%, to $1,774.50 per ounce on Comex, trading at the highest levels for a most-active contract since August, FactSet data show.

Silver futures for December
SIZ22,
+1.38%

SI00,
+1.38%

rose 35.8 cents, or 1.7%, to $22.025 per ounce.

Palladium futures
PAZ22,

for December fell 50 cents, or less than 0.1%, to $2,026 per ounce, while platinum futures for January
PLF23,
-0.60%

retreated $6.10, or 0.6%, to $1,032 per ounce.

December copper 
HGZ22,
-1.95%

fell 5.9 cents, or 1.5%, to $3.8545 per pound.

What’s happening

Metals prices advanced sharply last week as the U.S. October consumer-price index report came in softer than expected, sparking a sharp rally in stocks, bonds and gold, among other assets.

As a result, it appears gold is shifting back toward a more neutral stance, according to the authors of the Sevens Report.

“Looking at the charts, gold tested the late September lows once in October and then again in early November, successfully holding above the $1,630 [an ounce] area both times while prices broke beyond the October highs, which ultimately shifts the technical outlook to neutral from bearish,” they said.

Gold’s gains Monday come despite strength in both the dollar and Treasury yields. The ICE U.S. Dollar Index
DXY,
+0.45%
,
a measure of the currency’s strength against a basket of rivals, rose 0.6% to 106.868, while 10-year Treasury yields
TMUBMUSD10Y,
3.871%

rose more than 7 points to 2.891%.

Still, prices on Monday did touch an intraday low at $1,755.80. That followed “cautionary comments from Federal Reserve Governor Christopher Waller that policymakers had “‘ways to go’ before ending interest-rate hikes,” said Rupert Rowling, market analyst at Kinesis Money, in daily commentary.

The remarks “served as a reminder that gold’s huge gains last week were driven by sentiment that the Fed will be less aggressive with its future upcoming interest rate decisions rather than on any firm fact,” he said.

Rowling pointed out that pace of last week’s gains, “in which gold climbed more than $100 an ounce, leave gold open to some profit-taking this week as investors reassess where the true value of the precious metal lies.”

“While the latest inflation figure out of the U.S. was undoubtedly encouraging, rising consumer prices remain an issue that the Fed looks determined to get back under control through interest rate rises,” said Rowling.

Given all of that, “gold’s current price looks dangerously high and it would only take a slight shift in sentiment on where the Fed will go with its December rate move for the price to come quickly crashing back to $1,700 an ounce,” he said. 

Also see: ‘Era of cheap’ copper prices may be coming to an end

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