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Metals Stocks: Gold, silver climb as traders see chance of less aggressive Fed rate rises

Gold and silver prices traded higher on Thursday as prices for the precious metals continued to seesaw this week alongside the U.S. dollar and Treasury yields.

Price action

Gold futures for December delivery
GCZ22,
+0.45%

climbed $1.60, or 0.1%, to $1,635.80 per ounce after losing 1.3% on Wednesday.

December silver futures
SIZ22,
+1.67%

advanced 12.1 cents, or 0.7%, to $18.48 per ounce.

December palladium
PAZ22,
+2.63%

rose $36.50, or 1.8%, to $2,032 per ounce, while January platinum
PLF23,
+2.89%

rose $16.20, or 1.8%, to $897.30 per ounce.

Copper futures expiring in December
HGZ22,
+3.29%

gained 8.4 cents, or 2.5%, to $3.402 per pound.

What’s happening

Prices of the most-active gold contract are rising on Thursday as some precious-metals traders bet that expectations for further Federal Reserve interest-rate hikes may have finally peaked, according to Daniel Ghali, senior commodity strategist at TD Securities.

“The December meeting has about 50% odds of another jumbo hike. The traders are now starting to look at signs that peak central-bank hawkishness is now behind us,” Ghali said.

The ICE U.S. Dollar Index
DXY,
-0.35%
,
a gauge of the dollar’s strength against a basket of rivals, is down 0.2% at 112.71.

On Wednesday, St. Louis Fed President James Bullard, a key voice on the Fed’s policy-setting committee, sent a dovish signal to the market by saying that he believes the central bank can conquer inflation in the U.S. without cracking the labor market.

Chintan Karnani, director of research at Insignia Consultants, told MarketWatch that he’s looking out for news on additional stimulus measures in China before the Chinese New Year in the last week of January.

He expects” new stimulus measure sin China before their New Year,” and expects precious metals demand to “be high in China if additional stimulus is announced.”

Karnani also said he believes traders are sitting on a “record high cash due to uncertainty over U.S. senate elections.” Most of that cash will be invested by the middle of November, he said, and it’s likely will not see a big incremental increase in bond yields after the November elections.

“There will be a switch over from bonds to stocks, precious metals and base metals,” he said. Still, the “‘X factor’ will be determining where the record cash pile gets invested. Gold and silver should get a good percentage of long-term investment from the cash pile.”

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