Metals Stocks: Gold futures extend slide thanks to unexpected August rise in U.S. inflation

Metals Stocks: Gold futures extend slide thanks to unexpected August rise in U.S. inflation

Gold futures traded lower on Wednesday, extending their decline to a second session in a row, as a surprisingly strong U.S. August inflation print continued to reverberate across markets.

Price action
  • Gold price
    GCZ22,
    -0.48%

    for December delivery were off $2.10, or 0.1%, to $1,715.30 per ounce on Comex after losing 1.3% on Tuesday.

  • Silver prices
    SIU22,
    0.41%

    for December were edged up by 8.9 cents, or 0.5%, to $19.58 per ounce following a 1.9% loss a day earlier.

  • December palladium
    PAZ22,
    2.74%

    added $14.90, or 0.7%, to $2,126 per ounce, while platinum
    PAZ22,
    2.74%

    for October delivery rose $18.30, or 2.1%, to $902 per ounce.

  • December copper
    HGZ22,
    -1.00%

    fell 2 cents, or 0.6%, to $3.535 per pound.

What analysts are saying

Gold peaked on Monday, trading around $1,735 per ounce, before it began its slide t his week. Now, it’s trading just above the closely watched $1,700 level.

“Gold traders are also feeling enormous pain due to the strength in the dollar index, which has been increasing mainly due to higher bets on a more aggressive monetary policy,” said Naeem Aslam, chief market analyst at AvaTrade, in a market update Wednesday.

The ICE U.S. Dollar index
DXY,
-0.30%

was down 0.2% at 109.551 in Wednesday dealings, but has gained 0.5% so far this week.

“The path of the least resistance for gold prices is likely to be skewed to the downside, which means we could see the gold price plunging” towards $1,650,” Aslam said.

For now, “markets are still digesting the U.S. inflation figure after there was unexpected growth in monthly consumer prices,” wrote Rupert Rowling, a market analyst for Kinesis Money.

See: U.S. inflation roars back in August, CPI shows, despite falling gas prices

In other news, silver has been exhibiting an interesting technical pattern as of late.

“Silver has been under the spotlight in the last few days, showing an interesting signal of recovery. Earlier this week, silver gained in conjunction with the rebound of stock markets and with the retreat of the U.S. dollar, after months of strength,” Rowling wrote.

Falling gasoline prices helped deliver a second lower U.S. annual inflation reading in a row as the consumer price index increased by just 0.1% in August, but the report also showed inflation has spread more broadly through the economy and is set to spur the Federal Reserve to sharply raise interest rates again.

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