Gold eyes back-to-back losses as dollar climbs and stocks rally

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Gold futures edged lower on Thursday for a second straight day as the dollar extended its recent decline against its major rivals and investors plunged back into buying stocks.

Gold futures contracts are due to expire in June GC00,
+0.03%
were down 0.1%, or just under $2, to trade at $1,844.40 an ounce. Silver SI00,
+0.30%,
meanwhile, rose 0.2%, or 5 cents, to nearly $22 an ounce.

US stocks headed higher, putting stocks on pace for weekly gains, as investors weighed the minutes of the Federal Reserve’s meeting in early May, bolstering expectations that the bank will trigger a series of half-point rate hikes this summer to fight inflation. , but then keep monetary policy flexible.

“Higher interest rates are hurting gold, even if it’s not historically consistent,” George Milling-Stanley, chief gold strategist at State Street Global Advisors, said by phone.

But Milling-Stanley also thinks gold has room to rise, given strong inflationary pressures from Russia’s war in Ukraine and higher labor costs in the United States, which it says will keep the cost of living high, within the 5% range, throughout the year. to finish.

“This is an opportunity for gold and for people who want to invest in gold,” he said, adding that precious metals tend to outperform when inflation stays above 5% for at least less than a quarter.

Traders also wondered if Treasury yields could have reached a recent high, particularly with the 10-year Treasury rate slipping to 2.77% from its peak of 3.124% in early May.

Gold prices had risen for four consecutive sessions before ending lower in Wednesday’s session.

Long seen as safe-haven assets during periods of market volatility, gold and silver have aligned more with “risky” assets like stocks in recent months and weeks, much to the chagrin of some long-time analysts. .

Meanwhile, the dollar attracted some of these safe-haven flows, which in turn helped propel the greenback to its highest level in decades, although the ICE dollar index DXY,
-0.17%,
an indicator of the dollar’s strength against a basket of its major rivals, has lately pulled back somewhat. Some strategists, including Steven Barrow, head of G-10 strategy at Standard Bank, predict that the greenback could start to weaken.

Thursday’s risky mood in stocks came despite a dire economic warning from China and news that Apple Inc. AAPL,
+2.24%
had told its contractors to assemble fewer iPhones than expected during the next production cycle.

Other precious metals traded higher on Thursday, with platinum up 0.8%, or nearly $7.10, at $936.40 an ounce. Palladium fell 0.3% to $1,989 an ounce.

Copper HG00,
+0.24%
prices were steady to trade at $4.26 per pound.

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