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Metals Stocks: Gold dips back below $1,900 an ounce as U.S. dollar jumps

A soaring U.S. dollar continued to take the steam out of gold on Wednesday, with the yellow metal dipping below $1,900 an ounce to trade at its lowest since late February.

Gold for June delivery
GC00,
-0.03%

GCM22,
-0.03%

was down $4.40, or 0.2%, at $1,899.70 an ounce on Comex, after trading as low as $1,883.20 — the weakest for a most actively traded contract since Feb. 24, according to FactSet. May silver
SIK22,
+0.77%

rose 13.1 cents, or 0.6%, to $23.675 an ounce.

Gold has failed to find haven-related supported, even after Russia halted natural-gas supplies to Poland and Bulgaria in an escalation of tensions surrounding the Russian invasion of Ukraine.

Read: ‘Energy is being increasingly weaponized.’ Analysts weigh up risks after Russia cuts gas to two EU countries

Analysts said the dollar’s continued rise versus major rivals, with the ICE U.S. Dollar Index
DXY,
+0.45%

trading at levels last seen in March 2020, remains a headwind for gold. A stronger dollar makes commodities priced in the unit more expensive to users of other currencies. The dollar has been lifted on expectations the Federal Reserve will move aggressively to raise interest rates and otherwise tighten monetary policy in response to inflation running at its hottest in four decades.

A failure to hold above $1,900 “even with the Ukrainian-Russian war providing a clear investment reason for the ultimate haven asset, would illustrate how much the action of the Federal Reserve drives markets,” said Rupert Rowling, market analyst at Kinesis Money, in a note.

“With interest rate hikes all but guaranteed by the U.S. central bank in May and June and highly likely in July too, gold’s lack of yield has seen it fall out of favor by investors,” Rowling said, facilitating a sharp fall for the metal from more than $2,000 an ounce around a month ago.

“That said, $1,900 remains a very high level for gold historically and given the fragile state of markets currently, it wouldn’t take much for renewed fear trading to push its price upward once again,” he wrote.

In other metals trade, July copper
HGN22,
+0.46%

ticked up 0.5% to $4.485 a pound.

July platinum
PLN22,
+1.15%

rose 0.9% to $920.30 an ounce, while June palladium
PAM22,
+2.59%

jumped 2.7% to $2,237.50 an ounce.

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