Metals Stocks: Gold climbs to highest level in nearly 2 weeks as dollar, yields retreat

A softer dollar and falling Treasury yields helped boost the price of gold to its highest level in nearly two weeks on Wednesday, as the yellow metal built on gains from the prior session driven by expectations for smaller interest-rate hikes by the Federal Reserve.

Price action

Gold futures for December GCZ22, +0.93% delivery rose $12, or 0.7%, to $1,670 per ounce on Comex after touching a high at $1,679.40 — the highest intraday level for a most-active contract since Oct. 13, FactSet data show.
December silver futures SIZ22, +1.25% added 19 cents, or 1%, to $19.54 an ounce.
December palladium PAZ22, +1.83% gained $37.70, or 2%, to $1,956.50 per ounce, while January platinum PLF23, +3.51% added $24.50, or 2.7%, to $944.20 per ounce.
Copper futures HGZ22, +3.22% for December gained 10 cents, or 2.9%, to $3.4965 per pound.

What’s happening

Precious metals prices got a boost with the dollar and yields on the retreat as investors adjust their expectations to factor in a slower pace of interest-rate hikes following the Fed’s upcoming November policy meeting.

Some very recent near-term technical developments suggest that the U.S. dollar index has “put in a major top, and the U.S. stock indexes have put in major bottoms.,” said Jim Wyckoff, senior analyst at Kitco.com, in a market commentary.

That could also mean inflation may be peaking and the Fed “may be closer to the finish line on its aggressive monetary policy tightening path,” he said. “All of the above may also mean the U.S. and/or global economy may be able to avoid a serious recession.”

These are “only extrapolations at present,” said Wyckoff, but “it appears the precious metals traders are picking up on these early chart clues, reckoning not only that the greenback may have peaked, but also that it could mean better consumer and commercial demand for the metals markets in the coming months.”

The ICE U.S. Dollar Index DXY, -0.71%, a gauge of the dollar’s strength against a basket of rivals, retreated 0.6% to 110.287, while the yield on the 10-year Treasury note TMUBMUSD10Y, 4.030% was off 7.6 basis points at 4.0276%.

Gold’s latest rebound may have more room to run — in the near term, at least — if “peak hawkishness” truly has passed, said analysts at Sevens Report Research in a Wednesday newsletter.

“Bottom line, the bounce in gold futures can last as long as this current period of hope for peak-hawkishness does, which will be characterized by an easing dollar and retreating yields,” they said. Still, “the long-term trends continue to favor the gold bears.”