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Metals Stocks: Gold futures slip but tally a gain for a sixth consecutive week

Gold futures finished slightly lower on Friday, but tallied a sixth weekly gain in a row after touching their highest level in nine months earlier this week, as the latest reading on U.S. inflation met with most market expectations.

Price action

Gold prices for February


fell 60 cents, or less than 0.1%, to settle at $1,929.40 an ounce on Comex, with the most-active contract up nearly 0.1% for the week, according to Dow Jones Market Data. Prices, which traded at a nine-month high earlier in the week, marked a sixth straight weekly gain — the longest such streak of gains since August 2020.

Silver prices for March


fell by 40 cents, or 1.7%, to $23.622 per ounce, ending 1.3% lower for the week.

March palladium

fell by $64.10, or nearly 3.9%, to $1,599.70 per ounce, down 7.2% for the week, while platinum for April

declined by $6.20, or 0.6%, to $1,016.80 an ounce — 3% lower for the week.

Copper for March

fell by 4 cents, or almost 1.1%, to $4.2225 a pound, for a weekly loss of 0.7%.

Market drivers

“Gold has had a good run in the last few weeks benefitting from the downturn in the U.S. dollar,” Colin Cieszynski, chief market strategist at SIA Wealth Management, told MarketWatch.

Technically, gold was looking “a bit overbought and due for a pause in the short term,” especially with the Federal Reserve policy decision due Wednesday, he said. The longer-term picture remains bullish, he said.

Friday’s U.S. PCE inflation numbers came in line with most market expectations.

U.S. consumer prices increased by just 0.1% in December, the smallest increase in 15 months. The annual increase in prices slowed to 5% in December from 5.5% in the prior month and a 40-year high of 7% last summer. The increase in the core rate of inflation in the past 12 months decelerated to 4.4% from 4.7%. That’s also the lowest level in 14 months.

An annualized decline to 4.4% “appears to confirm” a 25 basis point interest-rate hike at the Federal Reserve’s meeting next week, said Michael Hewson, chief market analyst at CMC Markets UK, in a market update. The Fed will announce its policy decision on Feb. 1.

See: Inflation rate in the U.S. slows again to 15-month low, PCE shows

“The Fed’s biggest problem now will be to ensure that market expectations about rate cuts get pared back,” said Hewson.

Separately, U.S. consumer sentiment improved in late January to 64.9, according to the University of Michigan’s gauge of consumer attitudes. This was up from the initial January reading of 64.6. Economists surveyed by The Wall Street Journal had forecast an unchanged reading of 64.6.

At the end of the day, the Fed can surprise the market not just through interest rates, but by “small and meaningful tweaks to its economic outlook and inflation outlook,” said Chintan Karnani, director of research at Insignia Consultants, so “traders are on the edge before FOMC in case there is some surprise.” 

Gold has yet to break the $2,000 level, and there will likely be “sharp corrections unless there is a convincing break” of that level, said Karnani. “Gold traders will be looking for clues on interest rate pause in the FOMC so that they can force a break of $2,000.”

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