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Gold futures rose Wednesday, with bulls attempting to stretch a winning streak for the precious metal to five sessions after data on U.S. wholesale prices revealed a bigger-than-expected rise in March.
“Traders know that inflation isn’t going to ease off from its current level overnight, even though we may have seen a peak inflation situation,” said Naeem Aslam, chief market analyst at AvaTrade, in a daily note.
On Wednesday, data showed that the cost of wholesale goods and services jumped 1.4% in March largely because of more expensive gas and food, signaling that U.S. inflation is likely to stay near a 40-year high through the spring. Economists polled by The Wall Street Journal had forecast a 1.1% gain.
“The other important point for gold traders is that if inflation has peaked, that means that the future trajectory of the [Federal Reserve’s] monetary policy isn’t going to be as hawkish as it currently is,” said Aslam. “This fact is also supporting the current gold price move.”
Gold for June delivery
GC00,
GCM22,
was up $6.90, or 0.4%, to $1,983 an ounce on Comex. May silver
SIK22,
was up 22.5 cents, or 0.9%, at $25.96 an ounce. Gold rose 1.4% Tuesday for its fourth straight gain, logging its highest finish since March 11. May silver closed at its highest since March 24.
“As the war in Ukraine approaches a new stage, with a Russian offensive expected in the east, gold’s haven appeal could once again increase, creating scope for further gains,” said Ricardo Evangelista, senior analyst at ActivTrades, in a note.
Russian President Vladimir Putin on Tuesday vowed that his country’s invasion of Ukraine would continue until its goals are met as he concentrates forces on the eastern Donbas region after a push toward the capital of Kyiv was thwarted.
Gains for gold on Wednesday came as U.S. Treasury yields eased, following the release of US inflation data, which despite reaching a fresh 40-year high, also gave signs that it may have peaked, Evangelista said.
“The markets have been pricing-in the Fed’s new hawkish stance and the prospect of inflation stabilization will reduce the scope for further dollar gains, a scenario that will be positive for gold due to the inverted correlation with the greenback,” he wrote.
Gold, however, has largely brushed off a recent rise in Treasury yields, with analysts tying underlying support to the metal’s roles as a haven and an inflation hedge. Higher Treasury yields raise the opportunity cost of holding nonyielding assets like gold.
In other metals trading, May copper
HGK22,
lost 0.5% to $4.688 a pound. July platinum
PLN22,
added 1.3% to $985.40 an ounce and June palladium
PAM22,
traded at $2,378 an ounce, up 1%.
