Metals Stocks: Gold finishes higher on inflation concerns to recoup some recent losses

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Gold futures edged higher Monday, bouncing after last week’s pullback, finding support from growing concerns over inflation, as investors monitored developments in the Russia-Ukraine war and inflation worries grow.

The precious metal shook off pressure from a further rise in Treasury yields and a slightly stronger dollar.

“Gold is holding up fairly well in the face of multiple super-sized rate hikes being priced into the markets and risk appetite remaining fairly strong,” said Craig Erlam, senior market analyst at OANDA, in a market update.

“The inflation risk is seemingly providing plenty of support, which is why we’re seeing so many rate hikes being priced into the markets, along with the downside economic risks that continue to mount,” he said.

Gold for June delivery
GC00,
+0.49%

GCM22,
+0.49%

rose $10.30, or 0.5%, to settle at $1,934 an ounce after falling 1.6% last week.

May silver
SIK22,
-0.34%
,
however, edged down by 6 cents, or 0.3%, at $24.59 an ounce after posting a weekly loss of almost 3.8% on Friday.

Analysts said gold may also be finding some haven-related buying interest after a weekend of grim headlines and images out of Ukraine as Russian forces pulled back from the capital, Kyiv.

So far, the bodies of 410 civilians have been found in towns near the capital that were recently retaken from Russian forces, said Ukraine’s prosecutor-general, Iryna Venediktova. The images prompted several European leaders to call for tougher sanctions against Moscow.

“On the macro front, the war in Ukraine is still one of the main market drivers, of course, but investors are also paying a lot of attention to inflation,” which continued to run hot in the U.S. and Europe, said Carlo Alberto De Casa, external market analyst at Kinesis Money, in a note.

Gold gained ground, even as Treasury yields resumed a push to the upside and the ICE U.S. Dollar Index
DXY,
+0.44%
,
a measure of the currency against a basket of six major rivals, edged up 0.4% in Monday dealings. Higher yields can be a negative for gold, raising the opportunity cost of holding nonyielding assets. A stronger dollar can also be a negative for commodities priced in the unit, making them more expensive to users of other currencies. 

Gold, meanwhile, “has failed to surpass the resistance zone of $1,950 but has managed to remain above the support zone of $1,890-$1,900 and the precious metal has started the new week moving laterally between $1,920 and $1,930,” De Casa wrote.

“From a technical point of view, a break above or below these levels would offer a first directional signal to investors,” he said.

In other Comex dealings Monday, May copper
HGK22,
+1.84%

tacked on 2% to $4.782 a pound. July platinum
PLN22,
-0.02%

added 0.2% to $991 an ounce and June palladium
PAM22,
+0.73%

settled at $2,275 an ounce, up 0.3%.

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