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Metals Stocks: Gold prices settle higher, but post a fourth straight weekly decline

Gold futures settled higher on Friday, after briefly slipping back in the wake of better-than-expected U.S. jobs data, but posted a fourth consecutive weekly loss as overall strength in the U.S. dollar pressured commodity prices.

The precious metal managed to recoup on Friday only a small portion of the losses that pulled prices to their lowest settlement in more than nine months this week.

Price action

August gold
GCQ22,
+0.16%

GC00,
+0.16%

tacked on $2.60, or nearly 0.2%, at $1,742.30 per ounce. Prices for the most-active contract, which settled Wednesday at their lowest since late September 2021, marked a weekly loss of 3.3%, according to Dow Jones Market Data.

September silver
SIU22,
+0.38%

SI00,
+0.38%

added 5 cents, or nearly 0.3%, to $19.236 per ounce, ending 2.2% lower for the week.

October platinum
PLV22,
+2.01%

settled at $882.80 an ounce, up $17, or 2%, for the session and 1.3% higher for the week.

September palladium futures
PAU22,
+8.03%

added $163.20, or 8.2%, at $2,156.60 per ounce, with the contract posting a weekly rise of more than 11%.

Copper futures for September
HGU22,
-1.50%

edged down by 5 cents, or 1.4%, at $3.522 per pound, losing 2.3% for the week. Prices on Wednesday settled at their lowest since November 2020.

What analysts are saying

Gold continues to be impacted by strength in the U.S. dollar, said Colin Cieszynski, chief market strategist at SIA Wealth Management. For much of this week, U.S. dollar strength “has been related to capital leaving overseas markets and seeking a haven in the U.S.

The ICE U.S. Dollar index
DXY,
-0.09%

was down little changed in Friday dealings, but on track for a weekly rise of 1.8%.

Dollar strength is being driven by a rally in U.S. Treasury yields as the Federal Reserve raises interest rates to combat inflation while the labor market remains healthy, Cieszynski told MarketWatch.

The U.S. created a bigger-than-expected 372,000 new jobs in June, government data showed on Friday.

See: U.S. creates 372,000 jobs in June with a strong labor market a bulwark against recession

“Gold dipped a bit on the news, but more importantly, U.S. Treasury yields rose. The rising U.S. bond yields late this week suggest the marketplace is putting inflation worries back closer the front burner of the marketplace, and maybe on par with recession worries,” said Jim Wyckoff, senior analyst at Kitco.com, in a note.

The 10-year Treasury yield
TMUBMUSD10Y,
3.095%

was up 6 basis points at 3.068% in Friday trading.

Next week, action in the dollar may continue to be a big driver for the gold market, said Cieszynski. “There are a number of key inflation reports coming which could move the market, including Chinese inflation numbers due on the weekend, and U.S. consumer and producer price inflation reports during the week.”

So far, 2022 has proven to be “ugly” for traders in anything but the energy sector, with the dollar soaring as inflation and the Fed “pull the rug from beneath all leveraged markets,” said Adrian Ash, director of research at BullionVault, with gold trading lower year to date.

Read: Here are some of the challenges gold investors face in the second half of 2022

This week’s loss in gold “still puts the precious metal well ahead of equities, bonds or base metals for 2022 so far, never mind crypto,” Ash told MarketWatch.

Action in gold exchange-traded fund holdings “doesn’t suggest any kind of rush for the exits, and bullion is likely to attract fresh inflows if the slump in world stock markets extends into the second half of this year, led by the increasingly stagflationary outlook,” he said.

Meanwhile, palladium was a standout, with prices up a third straight week.

“Recently, the palladium market has been immune to significantly negative macroeconomic psychology as well as to panic liquidation of physical commodities,” analysts at Zaner wrote in Friday’s newsletter.

In a note earlier this week, analysts Macquarie said platinum group metals, particularly palladium, “should at least benefit from the potential countercyclicality of the autos sector as pent-up demand supports sales once supply disruptions ease.” 

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