Gold tallies a 4th straight session gain and highest finish in a month

Gold futures rose for a fourth straight day Tuesday to their highest settlement in a month, as U.S. data showed annual inflation climbed above 8% in March for the first time in 40 years.

The U.S. rate of inflation in the past year moved up to 8.5% in March from 7.9%, the government said Tuesday. The last time inflation breached 8% was in January 1982. The consumer price index jumped 1.2% last month — the largest monthly gain since Hurricane Katrina in 2005 — driven by the higher cost of gasoline, food and housing.

“Gold continues to benefit from the tailwinds provided by spicy inflation numbers,” including [Tuesday’s] reading, which some are calling the prelude to a peak,” Adam Koos, president at Libertas Wealth Management Group, told MarketWatch. “Not even interest rates or the rise in the [U.S. dollar] can seem to stop the higher prices in the yellow metal.”

Gold for June delivery
GC00,
-0.37%

GCM22,
-0.37%
rose $27.90, or 1.4%, to settle at $1,976.10 an ounce on Comex after eking out a third straight gain on Monday. Based on the most-active contract, prices marked their highest finish since March 11, FactSet data show. May silver
SIK22,
-0.67%
rose 75 cents, or 3%, to $25.735 an ounce — for the highest finish since March 24.

Koos said the market is likely to see a pause at some point in the inflation data sometime in the coming months.

The U.S. core rate of inflation that strips out food and energy rose just 0.3% last month.

But for any “lull to become permanent, countries such as China are going to have to put a stop to their “zero COVID” policies, which will continue to bottleneck the supply chain and feed the inflation monster,” Koos said.  As soon as they realize COVID is “going to be around for a long, long time — that’s when we’ll start to see softer CPI numbers.”

In terms of interest rates, Koos said he doesn’t know if we’ve seen the long-term bottom, but I “we’re close to a short-term high, and any pullback in rates is going to be a catalyst for gold to move higher.”

Prices may see a climb to $2,150 sometime in the next few months, followed by a brief pullback to the August 2020 and March 2022 highs, he said. After that, he said he believes prices will resume the uptrend that’s been in place since February.

Gold gained ground Tuesday as U.S. Treasury yields pulled back, with the 10-year yield trading at 2.708%, after touching highs above 2.8% for the first time since January 2019. A fall in yields can lower the opportunity cost of holding nonyielding assets like gold.

In other metals trading, May copper
HGK22,
+0.18%
tacked on 1.6% to $4.71 a pound. July platinum
PLN22,
+0.15%
lost nearly 0.6% to $972.40 an ounce and June palladium
PAM22,
+0.49%
settled at $2,354.30 an ounce, down 2.6%.



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