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Metals Stocks: Gold stretches losses to a second day; silver slides to weakest since summer 2020

Gold prices settled higher for a second straight session on Tuesday, holding ground at their weakest level in more than nine months as the precious metal continued to feel the pressure from a stronger U.S. dollar.

What are prices doing ?

Gold futures
GC00,
-0.46%

GCQ22,
-0.46%

for August delivery fell $6.90, or 0.4%, to settle at $1,724.80 an ounce after touching a low at $1,721.60. Prices based on the most-active contract settled at their lowest since Sept. 29, 2021, FactSet data show.

Silver futures
SIU22,
-1.13%

for September delivery fell 17 cents, or 0.9%, to $18.958 an ounce — their lowest finish since July 2020.

Platinum futures
PLV22,
-3.56%

for October delivery declined by $32.60, or 3.8%, to $828.10 per ounce.

Palladium futures
PAU22,
-6.13%

for September delivery lost $156, or 7.2%, to $2,015.60 per ounce, falling back after posting a three-session climb.

Copper prices
HGU22,
-4.15%

for September delivery fell 14 cents, or nearly 4.2%, to $3.288 per pound, the lowest finish since Nov. 2020.

What’s driving the market ?

Gold has been “smothered” by an appreciating dollar and expectations over the Federal Reserve maintaining an aggressive stance towards higher interest rates, said Lukman Otunuga, manager, market analysis at FXTM, in a note.

“The precious metal looks depressed and could be in store for more pain if the pending U.S. CPI report meets or exceeds market expectations” when it’s released Wednesday, he said.

Since gold hit its 2022 peak north of $2,000 per ounce back in March, it has been largely driven by the strong dollar which is at a 20-year high based on the index
DXY,
-0.02%

measuring its strength against major currencies, while higher Treasury yields, which have stolen some of the precious metals’ luster in the eyes of investors.

Analysts at TD Securities blamed relative weakness in precious metals and crude oil on the broader “risk off” mood on Tuesday. U.S. benchmark stock indexes were mixed, while the dollar
DXY,
-0.02%
,
which has established itself as the market’s preferred safe-haven asset, continued to climb toward parity with the euro
EURUSD,
+0.12%
.

See: Euro pauses at parity. But what comes next?

“The worst inflationary environment in four decades has not proved helpful for gold prices, which are pacing towards a fresh round of yearly lows versus the U.S. dollar,” said Chris Vecchio, a strategist at DailyFX, in emailed commentary. Gold prices remain on track to move below $1,700 over the coming months, he said.

Other markets

S&P 500 index
SPX,
-0.10%

was down 0.1%.

The Dow Industrial Average
DJIA,
+0.19%

tacked on 0.2%.

The dollar reached parity with the euro
EURUSD,
+0.12%
.

The 10-year Treasury yield
TMUBMUSD10Y,
2.965%

shed 3.6 basis points to trade at 2.959%, dropping further below 3%.

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