Metals Stocks: Gold ends Friday higher, but books worst month since Sept. 2021 on strong dollar

“Gold prices are seeing safe-haven demand as Europe grapples with its energy dependency on Russia, and Russia is putting the squeeze on supplying natural gas and oil to European countries,” said Jim Wyckoff, senior analyst at Kitco.com, in a Friday client note.

“The Russia-Ukraine war appears to be intensifying with Western nations supplying more weapons to Ukraine. Russian President Vladimir Putin is ratcheting up his anti-West rhetoric. All of the above suggests an ultimate outcome that is not favorable.”

The ICE U.S. Dollar Index
DXY,
-0.43%,
a measure of the currency against a basket of six major rivals, was down 0.4% on Friday, a day after hitting a five-year high. The index remains up 5% in April.

“The price of gold was crushed this week with the dollar rising strongly, which we think may be attributed to a steep selloff in the equity markets,” said Peter Cardillo, chief market economist at Spartan Capital Securities, in a note.

“From a technical perspective, the market has undergone a serious setback. While the war and inflation factors make a solid case for gold to advance to new highs, the above combination we mentioned seems to be a depressing factor for the metal,” he wrote.

Despite the technical damage, the longer-term outlook remains positive, Cardillo said. “We would take advantage of the recent decline and add to long-term positions,” he wrote.

But it’s also the last trading day in a brutal April for stocks and other corners of financial markets, with the S&P 500 index
SPX,
-2.31%
headed for a 6.8% decline for the month.

“Risk aversion is keener on this last trading day of the week and of the month,” said Wyckoff.

In other metals trade, July copper
HGN22,
-0.45%
was flat at $4.44 a pound. July platinum
PLN22,
+2.68%
was up 2.6% at $934.30 an ounce, while June palladium
PAM22,
+3.12%
rose 3% to $2,276 an ounce.