Gold prices slumped on Thursday, with strength in the U.S. dollar contributing to the shiny metal’s drop below $1,700 an ounce to its lowest intraday level in nearly a year. Silver and platinum also hit fresh 2-year lows.
- Gold futures GC00, -1.80% GCQ22, -1.79% for August delivery fell $27.10, or 1.6%, to $1,708.40 per ounce after touching a $1,695 low. That was the lowest intraday level for a most-active contract since Aug. 9, FactSet data show.
- Silver futures SIU22, -5.23% for September delivery fell 91.9 cents, or 4.8%, to $18.275 per ounce, hitting a new two-year low.
- Platinum futures PLV22, -1.91% for October delivery were off $11.80, or 1.4%, to $826 per ounce after a low at $806.70 — its lowest since late June 2020.
- Palladium futures PAU22, -3.37% for September delivery were down $81.40, or 4.1%, to $1,890 per ounce.
- Copper futures HGU22, -3.27% HG00, -3.27% for September delivery were off 10.6 cents, or 3.2%, to $3.2165 per pound, having touched its lowest level since the fourth quarter of 2020.
What analysts are saying
Analysts largely blamed the strong U.S. dollar, which has weighed on precious metals prices since gold peaked above $2,000 per ounce earlier this year.
The U.S. dollar climbed to its highest level against the Japanese yen since 1998 on Thursday.
The U.S. dollar USDJPY, +1.13% is nearing 140 yen to the dollar as the Bank of Japan adheres to its loose monetary policy framework while in the U.S. investors increasingly expect the Federal Reserve to delivery a full percentage point interest rate hike after its July meeting later this month.
Atlanta Federal Reserve Bank President Raphael Bostic said yesterday that “everything is in play” when asked about the prospects of a full percentage-point hike. Bostic isn’t a member of the Fed’s rate-setting committee this year, but he will be next year.
Gold’s losses on Thursday may offer an “excellent opportunity to be accumulating” the precious metal, Peter Spina, president and chief executive officer at GoldSeek.com, told MarketWatch. “Just do not expect a run to record highs for gold just now.”
The metal can rally back up towards $1,900-$2,000 again, but “it is unlikely we see the gold price break out of this price range we have been stuck in until we see the Fed pivot its aggressive interest rate hikes,” he said.
Looking ahead, Craig Erlam, senior market analyst at OANDA for the UK and EMEA, said that while the yellow metal is looking vulnerable, if recession becomes the base case, that could change — assuming investors looking for safety re-discover gold and Treasurys.
“It is a safe haven after all and there may come a point where the economy buckles under the weight of inflation and interest rates and gold will increasingly find itself in demand,” he said.