Metals Stocks: Gold shines with 4th straight gain, as economic data points to U.S. weakness

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Gold futures rose Tuesday, aiming for a fourth straight gain, as a fresh batch of U.S. economic data pointed to the drag of high inflation on the economy.

Gold for June delivery
GC00,
+0.90%

GCM22,
+0.90%

rose $18.60, or 1%, to $1,866.40 an ounce, while July silver
SIN22,
+1.67%

surged 1.9%, to trade at $22.14 an ounce.

“The US economy is not falling apart, but the weakness it is experiencing is much worse than many expected,” said Edward Moya, senior market analyst in the Americas at Oanda.

A pair of surveys released Tuesday — the S&P flash U.S. services index and flash U.S. manufacturing index — showed that U.S. businesses in May expanded at the slowest pace in several months, reflecting the effects of high inflation, ongoing supply shortages and some softening in customer demand.

New homes sales in April also fell for the fourth straight month, plunging to the lowest levels since the pandemic, on surging prices and soaring mortgage rates.

“There might be no stopping gold right now as the wall of worry on Wall Street continues to grow,” Moya said in written commentary Tuesday. ” Gold should remain supported as inflationary pressures weigh further, China’s COVID situation remains a big unknown, and corporate America continues to slash outlooks.”

Gold, which bounced after hitting a three-month low in early May, has benefited as the 10-year Treasury yield pulled back from a 3 1/2-year high above 3.2% in recent weeks, as a selloff in equities spurred demand for safe-haven assets.

The dollar, as measured by the ICE U.S. Dollar Index
DXY,
-0.26%
,
meanwhile, has retreated from a roughly 20-year high.

Gold “is benefiting from the drop in Treasury yields together with some dollar weakness — with which it has an inverted price correlation. The stabilization of Treasury yields and the dollar, which have retreated from peaks reached in mid-May, occurs as the markets appear to have priced-in the Fed’s hawkish tilt, and the appearance of some rays of hope for a brighter global economic outlook,” said Ricardo Evangelista, senior analyst at ActivTrades, in a note.

In other metals trading, July copper
HGN22,
-0.86%

fell 0.7% to $4.31 a pound.

July platinum
PLN22,
-0.76%

was down 0.3% at $947.70 an ounce, while June palladium
PAM22,
+1.21%

rose 1.3% to $1.992 an ounce.

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