Gold and silver futures ended lower Thursday for a fourth consecutive session, with prices for both metals settling at their lowest since late March as Fitch Ratings’ decision to put the U.S.’s AAA credit rating on notice helped boost the U.S. dollar.
Price action
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Gold futures for June delivery
GC00,
-0.22% GCM23,-0.22% declined by $20.90, or 1.1%, to settle at $1,943.70 per ounce on Comex, with prices for the most-active contract posting their lowest finish since March 21, according to FactSet data. -
July silver
SI00,
-0.79% SIN23,-0.79% declined by 33 cents, or 1.4%, to end at $22.91 per ounce, the lowest most-active contract settlement since March 22. -
Palladium for June delivery
PAM23,
-0.53% settled at $1,415.60 per ounce, up nearly 1.3%. Platinum for July delivery PLN23,+0.51% lost 0.3% at $1,026.30. -
Copper for July delivery
HGN23,
-1.05% rose by 3 cents, or 0.7%, to $3.59 per pound.
Market drivers
Fitch Ratings Inc. announced Wednesday evening that it was considering a downgrade of the U.S.’s credit rating. The news helped boost the value of the U.S. dollar, while weighing on global stocks and gold.
“The debt ceiling drama is getting most of the attention, but a hawkish shift in tone by a list of [U.S. Federal Reserve] officials recently has holstered the dollar and sent policy-sensitive rates (beyond those durations reacting to the debt negotiations) higher,” analysts at Sevens Report Research wrote on Thursday’s newsletter.
Federal Reserve Gov. Chris Waller is undecided on whether to support another increase in U.S. interest rates in June and said on Wednesday that he won’t back a “pause” until he sees more progress on reducing inflation.
Still, minutes released Wednesday afternoon from the Fed’s May policy meeting showed that “several” officials said that if the economy evolved as they expected “then further policy firming after this meeting may not be needed.”
“Bottom line for gold, if the dollar continues higher and yields extend their recent advance, the 2023 uptrend will likely break,” the Sevens Report analysts said. Gold futures trade lower for the month, but has held onto a gain of nearly 5% year to date.
Gold prices in early May had settled at their second-highest level on record, but have since pulled back as the U.S. dollar has strengthened. A stronger dollar makes gold, which is priced in dollars, more expensive for buyers in other currencies.
In a market update Thursday, Michael Hewson, chief market analyst at CMC Markets UK, said the dollar’s rise was partly to blame for the prospect of further losses for gold, and a possible move down towards $1,900 for the precious metal.
