Gold futures ended higher on Tuesday but marked a loss of nearly 6% for February — the largest monthly decline since June 2021.
- Gold futures for April delivery
climbed by $11.80, or nearly 0.7%, to settle at $1,836.70 per ounce on Comex. Prices for the metal, which touched its lowest intraday level year to date, marked a monthly loss of 5.6%, according to Dow Jones Market Data.
- Silver futures for May delivery
rose 28 cents, or 1.3%, to $21.071 per ounce, ending nearly 12% lower for the month.
- Palladium for June delivery
fell by $7, or 0.5%, to $1,420.90 per ounce, posting a monthly decline of nearly 14%, while platinum for April delivery rose by $13.60, or 1.4%, to $955.50 per ounce, losing 6.4% for the month.
- Copper for May delivery
gained 8 cents, or 2%, to $4.0895 per pound, with prices down 3.2% in February.
A morning of “challenging economic data” and some weakness in the U.S. dollar supported gold as prices bounced off 2023 lows, despite higher interest rates in the U.S., Rob Haworth, senior investment strategist at U.S. Bank Wealth Management, told MarketWatch.
Weakness in the U.S. economic data was “widespread, across consumer confidence, regional Fed business surveys from Chicago and Richmond and declining home prices in December,” he said.
Among the Tuesday data, a survey of consumer confidence showed a decline to a three-month low of 102.9 in February. The Chicago Business Barometer, also known as the Chicago PMI, fell to 43.6 in February from 44.3 in the prior month, according to a report from ISM-Chicago and MNI. The S&P CoreLogic Case-Shiller 20-city home-price index fell 0.5% in December.
Market expectations reflect that the Federal Reserve will reach a 5.25% to 5.5% target fed-funds range by midyear, said Haworth, but “with inflation continuing to surprise higher, investors are likely seeking some shelter from inflation pressures in the commodity complex, including gold.”
Gold prices had traded lower early Tuesday, with surprisingly hot inflation data out of France and Spain helping to cement expectations for a 50-basis-point rate hike by the European Central Bank at its March meeting.
See: U.K. grocery inflation reaches startling 17% as French and Spanish consumer price data surprise on the upside
Higher bond yields often weigh on the price of gold, since they make the yellow metal less appealing by comparison. Gold doesn’t offer a yield.
Looking ahead, Chintan Karnani, director of research at Insignia Consultants, pointed out that the market will see February U.S. employment numbers and February U.S. inflation numbers before the March 22 policy decision from the Federal Open Market Committee.
“Expect the unexpected in the next four weeks,” he said in a note. “Herd reaction will be very violent to news, technical breakout, technical breakdown in precious metals and base metals.”
He told MarketWatch that the “unexpected” could be a combination of very low jobs numbers in February, along with a falling trend in inflation, and the Fed may also surprise at the March 22 meeting by saying interest-rate hikes will be dependent on economic data, as opposed to the current stance of continued hikes.
Traders’ reactions lately have been “very wild to so-called economic surprises and policy surprises,” said Karnani. “Stop-losses tend to get triggered on both the buy side and sell side on a given day.”
Stop-loss orders are used to limit a trader’s losses by ordering a broker to buy or sell an asset when it reaches a specific price.
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