Gold prices Close Higher As USD, T-yields Retreat

Gold futures closed higher on Wednesday, with prices stretching their gains to a fourth-consecutive session to finish as the US dollar and Treasury yields eased back, boosting the appeal of the haven metal.

Volatility in the metal’s prices could be explained by fluctuations in the US dollar, which also obviously has long and short-term ties to inflation. Therefore, investors are awaiting a reading on the US consumer price index due out Thursday.

Without hotter inflation numbers, as long as yields continue to rise, it will be difficult for the dollar alone to provide enough boost to steadily lift gold prices through the spring.

The rise in the precious metal’s prices came as the dollar pulled back, down 0.1%, as measured by the ICE US Dollar Index ; and yields for the 10-year Treasury note were retreating to 1.92% after putting in the highest rate on Tuesday since July of 2019.

A weaker dollar, which precious metals tend to be priced in, and lower yields, usually helps to support buying in nonyielding commodities. At last check, April gold rose $8.70, or 0.5%, to settle at $1,836.60 an ounce, following a 0.3% rise on Tuesday, which marked the highest most-active contract settlement since 26 January.

Thursday’s essential CPI inflation report could tilt market expectations into either pricing anywhere between four to six Federal Reserve interest rate hikes this year. Gold prices may continue to trade in a range as inflation, rate hikes, the dollar, and interest rates all have to determine which direction their paddling. Some believe that short-term gold price spikes could be due to tension in Ukraine, and that could be true, but others do not think any geopolitical event is going to cause a lasting event on the price or price trend of gold.

Meanwhile, some analysts, however, are remaining sanguine about gold purchases in the nearer term. Technically speaking, the April gold futures bulls have the overall near-term technical advantage,” wrote Jim Wyckoff, senior analyst at Kitco.com, in a daily note. The next upside price objective for bullish investors in gold is to produce a close above solid resistance at the January high of $1,856.70 an ounce.

It is worth mentioning that March copper tacked on 3.2% to $4.603 a pound, the highest most-active contract finish since October. April platinum settled 0.1% higher at $1,037.40 an ounce and March palladium climbed by 0.9% to $2,285.10 an ounce.