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Metals Stocks: Gold ends lower, extending its pullback from 5-week high

Gold futures ended lower Wednesday for a second straight session, extending their pullback from the five-week high seen earlier this week.

The precious metal settled at its lowest level in over a week, and the pullback in prices could be “leading to a buying opportunity for gold bugs,” Michael Armbruster, managing partner at Altavest, told MarketWatch, arguing that a price in the $1,920s would be a good starting point to buy the metal.

If the 10-year Treasury yield “relents and starts falling based on U.S. growth concerns, we think that dynamic could propel gold prices well above $2,000 in the months ahead.” Treasury yields tend to drop when investors become concerned about economic growth and the resulting risk to corporate earnings,” he said.

“It’s more complicated with quantitative tightening on the horizon, but much of that may already be priced in to the treasury market by now” and despite the big rise in Treasury yields, “gold has been performing quite well.”

Gold for June delivery
GC00,
-0.19%

GCM22,
-0.19%

fell $3.40, or 0.2%, to settle at $1,955.60 an ounce on Comex, the lowest most-active contract finish since April 11, FactSet data show. May silver
SIK22,
-0.50%

shed 12 cents, or 0.5%, to $25.271 an ounce. Gold fell 1.4% Tuesday, after ending Monday at a five-week high, while silver lost 2.9%.

Read: Global industrial demand for silver hits record in 2021, and is set to extend gains this year

After sliding back below support at $1,960 in the previous session, gold struggled despite the slight pullback Wednesday in Treasury yields, said Lukman Otunuga, manager, market analysis, at FXTM.

“The precious metal remains pulled and tugged by conflicting forces and this continues to be reflected in price action,” he told MarketWatch. “Should gold fail to find a fresh fundamental spark, prices could be trapped within the $1,960 [to] $1,920 range for the rest of the week.”

Analysts have also said talk of peak U.S. inflation and slowing economic growth may be taking some steam out of precious metals, which have benefited from their reputation as an inflation hedge. The International Monetary Fund on Tuesday cut its forecast for global growth to 3.6% in 2022 from its January estimate of 4.4%, citing inflation and the Russia-Ukraine war as factors.

Commodities markets were mixed Wednesday, with a “slowing growth backdrop (China/EU) and the thoughts of peak inflation beginning to lessen the [year-to-date] inflation ‘hedge bid’ to metals, including gold,” said Stephen Innes, managing partner at SPI Asset Management, in a note.

Other metals finished lower, with the exception of palladium, which saw its June contract
PAM22,
+3.22%

climbed by 3.4% to $2,462.10 an ounce. July platinum
PLN22,
-0.19%

fell 0.2% to $987 an ounce. May copper
HGK22,
-1.17%

fell 1.4% to $4.652 a pound.

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