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Metals Stocks: Gold hits near one-month high as yields, U.S. dollar retreat

Gold climbed to nearly a one-month high on Thursday buoyed by a pullback in the U.S. dollar and Treasury yields, as investors awaited Friday’s July employment report report which may influence the Federal Reserve’s path of interest rate hikes.

Price Action

Gold for December delivery

jumped $25.80, or 1.4%, to $1,802.50 per ounce. 

Silver for September delivery

rose 26 cents, or 1.3%, to $20.17 per ounce. 


for September delivery was up $72.60, or 3.6%, to $2,080.50 per ounce, while platinum

for October delivery was up $25, or 2.8%, to $913.50 per ounce. 


for September delivery rose 1 cent, or 0.3%, to $3.48 per pound.

Market Drivers

Gold gained 1.4% on Thursday after the yellow metal broke a five-day winning streak on Wednesday, as Treasury yields moved lower after data from the U.S. service sector surprised markets with momentum and helped clear away some recession fears. 

An ISM barometer of business conditions at service-oriented companies such as restaurants, retailers and hotels in July rose to a three-month high of 56.7%, suggesting the economy continues to expand despite growing headwinds. 

Meanwhile, U.S. factory orders rose 2% in June, the government said Wednesday, in a report that offered some good news about the economy. Economists polled by MarketWatch had forecast a 1.2% gain. 

“Gold is pushing higher again this morning as yields ease of this week’s highs and the dollar softens,” said Craig Erlam, senior market analyst at OANDA, in a note on Thursday. “I’m not sure if this is a case of the Fed’s message not getting through or investors not buying it but the market is still favoring 50 basis points in September and a reversal towards the middle of next year.”

According to Erlam, a push toward 1,800 is possible as “more recession talk could also favor gold as it may lower interest rate expectations and trigger safe-haven flows.”

On Thursday the Bank of England hiked interest rates by 50-basis-point on Thursday as it predicted U.K. inflation may hit double digits by the end of 2022, despite warning that a long recession is on its way. British consumer price inflation hit a 40-year high of 9.4% in June. 

The hike in the U.K. benchmark interest rate was the biggest increase since 1995, and took it to 1.75%, the highest level since the financial crisis in 2008.

The yield on the 2-year Treasury note

fell to 3.078% on Thursday, while the 10-year Treasury note yield

was at 2.718%. 

Copper prices were dragged down for the fourth straight day on Thursday by tensions between the U.S. and China over Pelosi’s visit to Taiwan and by fears that a slowdown in global economic growth will dampen demand. 

Hear from Ray Dalio at the Best New Ideas in Money Festival on Sept. 21/22 in New York. The hedge-fund pioneer has strong views on where the economy is headed.

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