Metals Stocks: Gold prices down a third straight session; copper drops to a 16-month low

Gold futures finished modestly lower on Wednesday, down a third session in a row, as Federal Reserve Chairman Jerome Powell said in testimony before the Senate Banking Committee, that ongoing interest-rate increases will be “appropriate.”

Worries about an economic slowdown, meanwhile, helped prices for copper — a metal that’s often seen as an indicator of economic health — drop below $3 a pound for the first time in over a year.

Price action

August gold


edged down by 40 cents, or 0.02%, to settle at $1,838.40 an ounce on Comex.

July silver

dropped 35 cents, or 1.6%, to $21.421 per ounce.

July platinum

lost $12.60, or 1.3%, to $926.90 an ounce.

September palladium

shed $24.80, or 1.3%, to $1,837.90 an ounce.

July copper

lost 9 cents, or nearly 2.4%, to $3.944 per pound. Prices for the most-active contract settled at the lowest since February 2021, FactSet data show.

What’s driving markets

Gold traders and investors are focused on inflation and energy prices, Chintan Karnani, director of research at Insignia Consultants, told MarketWatch.

However, a “near recession outlook for the second half of the year can cause a pause in interest-rate hikes,” he said, which may support gold prices. Karnani said he sees gold as bullish in the third quarter as long as it trades over $1,810 on a daily closing basis, with a price target $1,950 and higher.

The Fed’s Powell on Wednesday continued to argue that a recession is not inevitable as a result of the interest-rate policy laid out by the central bank. “I don’t see the likelihood of a recession as particularly elevated right now,” he said.

See: Powell says U.S. economy can handle the additional rate hikes that are coming

In his opening statement, Powell said the Fed remains resolved to act aggressively to counter inflation, while pushing back against the notion that the Fed’s plans to raise rates even more aggressively.

“We anticipate that ongoing rate increases will be appropriate; the pace of those changes will continue to depend on the incoming data and the evolving outlook for the economy,” said Powell.

Insignia Consultants’ Karnani believes “this implies that interest rate hikes can be stopped after the July meeting, if previous interest rate hikes moderate inflation.”

Gold started the year right around the $1,800 level, and peaked above $2,050 an ounce in March before surrendering most of those gains during the second quarter. Futures prices have managed to hold above $1,800 an ounce, but the strength of the U.S. dollar has constrained the value of the yellow metal.

Silver has been seemingly caught in gold’s slipstream, according to a team of commodity analysts from Commerzbank, while demand in emerging markets, particularly the impact of China’s COVID lockdowns, has also weighed on precious metals prices. Week to date, gold traded little changed, while silver has lost less than 1%.

Copper prices, meanwhile, settled at their lowest in more than a year.

“The new lows in copper are a clear negative anecdotal sign for global growth and equity markets right now, and until we see copper stabilize we will have doubts about the sustainability of these squeezy rallies in equities,” analysts at Sevens Report Research wrote in Wednesday’s newsletter.

Other markets

The U.S. dollar

was down 0.3%, according to the ICE U.S. Dollar Index, which measures the greenback’s value against a basket of rich world currencies.

The yield on the 10-year Treasury

was off 15 basis points at 3.15%.

U.S. stocks edged higher in Wednesday dealings, as the Dow Jones Industrial Average

tacked on 96 points to 30,627.

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