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Gold futures closed sharply lower Thursday, booking their worst day in about a week, as inflation woes pushed a roaring U.S. dollar higher, pressuring the metal.
Gold for June delivery
GC00,
GCM22,
fell $29.10, or 1.6%, settling at $1,824.60 an ounce, while booking the biggest daily decline for the most-active contract since May 2, according to FactSet data. It also was its lowest settlement value since Feb. 7, 2022, according to Dow Jones Market Data. July silver
SIN22,
fell shed 3.7%, to settle at $20.773 an ounce.
The ICE U.S. Dollar Index
DXY,
a measure of the currency against a basket of six major rivals, was up 0.9%, near a 20-year high. A strong dollar is seen as a negative for commodities priced in the unit, making them more expensive to users of other currencies.
“You are right now looking at gold trading near dangerous technical levels,” said Edward Moya, senior analyst at Oanda, by phone. “$1,800 doesn’t look that far away.”
Should the selloff in bullion continue to gather steam, there could be a return to the days when gold prices shed $100 in a single day, Moya warned, adding that earlier concerns about persistently high inflation have given way into fears about potentially slowing global growth, which has investors flocking to the dollar for safety.
“That makes it an easy dollar trade, which is kryptonite for gold,” he said.
On the inflation front, wholesale prices slowed to 11% in April over the past year from 11.5%, the government said Thursday, still showing intense inflationary pressures in the guts of the U.S. economy. The April consumer-price index reading on Wednesday suggested inflation may have peaked, but still came in at a hotter than expected annual rate of 8.3%.
Another high reading on inflation ahead of the Fed’s next meeting in June could lead the central bank to consider a larger 75 basis point rate increase rather than the 50 basis point move that Fed Chairman Jerome Powell has said was on the table for the next two meetings, said Ricardo Evangelista, senior analyst at ActivTrades, in a note.
“Against such a backdrop, any gold strength resulting from the precious metal’s role as safe haven and inflation hedge is likely to remain capped by the rampant U.S. dollar,” he said.
In other metals on Comex, July copper
HGN22,
fell 2.6% to $4.1005 a pound. July platinum
PLN22,
skidded 5.9% to $931.40 an ounce, while June palladium
PAM22,
slumped 7.3% to $1,86.60 an ounce.
