Gold futures rebound from a more than 15-month low to settle at highest price in over a week

Gold futures finished Thursday at their highest price in more than a week buoyed by strength in the euro, in the wake of the European Central Bank’s decision to raise interest rates, which capped gains in the dollar, and a decline in U.S. Treasury yields.

The precious metal recouped all its losses from Wednesday, when prices marked the lowest settlement in more than 15 months.

Price action
  • August gold futures
    GC00,
    +0.19%

    GCQ22,
    +0.06%

    rose $13.20, or 0.8%, to settle at $1,713.40 per ounce after touching a low at $1,678.40. The settlement was the highest for a most-active contract since July 13, FactSet data show. Prices lost 0.6% on Wednesday.

  • September silver futures
    SIU22,
    +0.66%

    added 5 cents, or 0.3%, to $18.719 per ounce.

  • October platinum futures
    PLV22,
    +0.42%

    tacked on $12.20, or 1.4%, to $858.70 per ounce, while September palladium futures
    PAU22,
    +0.07%

    rose $15.10, or 0.8%, to $1,876.70 per ounce.

  • September copper futures
    HGU22,
    +0.30%

    lost 3 cents, or 0.8%, to $3.2985 per pound.

What analysts are saying

Gold prices climbed as the euro
EURUSD,
+0.01%

strengthened, putting pressure on the U.S. dollar, after the European Central Bank raised interest rates by 50 basis points, or half a percentage point, the first time it has raised rates in eleven years.

Read: ECB lays out criteria for anti-fragmentation usage, including IMF blessing over finances

As the euro pulled back from the day’s highs, however, gold came off its price highs, “although only a little because the accompanying drop in bond yields relieved some pressure off gold,” Fawad Razaqzada, market analyst at City Index and FOREX.com, told MarketWatch.

The yield on 10-year Treasurys
TMUBMUSD10Y,
2.838%

was down 9.9 points at 2.938% in Thursday dealings. The ICE U.S. Dollar Index
DXY,
+0.56%

was down 0.1% at 106.96.

The rise Thursday in gold, an asset historically seen as a safe-haven investment, came amid mixed market sentiment Thursday, following what has been a strong week for risk assets like stocks, as Europe weighed the outcome of a historic central bank meeting and the end of the maintenance period on the Nord Stream 1 natural gas pipeline from Russia to Europe.

Gold has been consolidating since summer of 2020, “in preparation of rate hikes to combat record high inflation,” Jeb Handwerger, editor of newsletter service Gold Stock Trades, told MarketWatch. “So the U.S. dollar has benefitted from these hikes, hitting 20-year highs compared to other fiat currencies.”

Read: Here’s what could trigger a lasting rally in gold prices

Gold, as well as the mining stocks, “won’t take off” until the Federal Reserve pivots and the U.S. dollar tops out, Handwerger said.  “This could happen possibly before U.S. Labor Day as GDP and the economy turns negative, and housing market starts decline — spooking recession fears.”

If the Fed pivots or halts hiking due to stocks and housing crashes on recessionary risks, the 2-year consolidation in gold could end and gold could finally break $2,000,” he said.