Gold futures closed nearly flat on Tuesday, finding support as a sharp bounce by the U.S. dollar ran out of steam, while investors awaited more cues on the Federal Reserve’s monetary policy path.
Gold for December delivery
slightly gained 30 cents, or 0.02%, to settle at $1,739.90 an ounce on Comex.
rose 18 cents, or 0.9%, ending at $21.05 an ounce.
was up $7.80, or 0.8%, to finish at $995.70 an ounce, while December palladium
rose $4.50, or 0.2%, to settle at $1,857.50 an ounce.
gained 4 cents, or 1.2%, ending at $3.61 a pound.
Gold slid on Monday, extending the previous week’s retreat, as the dollar bounced sharply higher. The ICE U.S. Dollar Index
a measure of the currency against a basket of six major rivals, was off 0.6% to 107.20 after jumping nearly 1% on Monday.
A stronger dollar can be a weight on commodities priced in the unit, making them more expensive to users of other currencies.
“Though the latest cooling of U.S. inflation has dampened fears of rampant inflation and thus ever more pronounced rate hikes by the U.S. Federal Reserve, it is still clear that the central bank has not yet finished tightening its monetary policy. After all, at 7.7% inflation is still a long way off its 2% target,” wrote analysts at Commerzbank.
Moreover, a November rebound by gold, with the metal up 6.6% month to date, has been driven largely by short covering, they wrote, a factor that appears to have run its course with Commodity Futures Trading Commission data showing that speculative traders now carry net long positions in gold futures, the Commerzbank analysts said.
“We are sticking with our assessment that the gold price will only recover lastingly once an end to the rate hikes is in sight. This is likely to be the case in the first quarter of 2023,” they wrote.
Edward Moya, senior market analyst with OANDA, said in a note on Tuesday that gold will struggle to muster up “a meaningful rally” as the dollar seems poised to find some support, unless markets see a major improvement with China’s COVID situation.
Investors awaited the release of the Federal Reserve’s meeting minutes, which is due out at 2 p.m. ET tomorrow, for more clues on the benchmark interest rates.
Traders widely expect the Fed to raise rates by 50 basis points in December, with some still betting on a 24% chance of a 75-bps hike, according to CME Group’s FedWatch Tool.