After Falling To A 2023 Low, Gold Is Set To Lose Weekly

In the previous session, gold futures fell for a fifth consecutive day, the lowest since that day was recorded on Dec. 30, as the market moved onward toward the weekend.

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Price Action

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• GC00, -0.38% GCJ23, -0.38% GCJ23, -0.38% April delivery gold, on the Comex, fell $2.60, or 0.1%, to $1,824.20 an ounce on Monday, which is on course to post a weekly loss of 1.4%.

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• There is a significant drop in March silver SIH23, -1.27% from $21.20 to $21.05 an ounce, falling by 1.2%.

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• It was a downbeat month for platinum prices, down 2.1% to $926 per ounce in April, while palladium prices dropped 1.1% to $1,413.50 per ounce in March.

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• The price of a pound of copper apex spiked 1.1% to $4,015 in March from $4,015 a pound in February.

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Market Drivers

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Since the beginning of February, Treasury yields have increased, and the dollar DXY, +0.54% has increased against the backdrop of heightened expectations of interest rate hikes by the Federal Reserve. A stronger dollar increases the cost of holding nonyielding assets such as gold, which will raise the opportunity cost of holding nonyielding assets. The strong dollar will also increase the cost of commodities priced in the U.S. dollar.

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A recent e-mail from Stephen Innes, managing partner of SPI Asset Management, told Trade Algo, "Investors are catching up to the Fed's “higher for longer” narrative – stronger growth, higher payrolls, and increased retail sales, coupled with the Fed’s additional response necessary to calm the roaring economic system in the United States.” As a result, gold has been hurt.

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When the U.S. consumer, labor and inflation numbers come out in a few weeks, he sees potential for a switch to cooler economic data in favor of gold. "But I believe that the recession anxiety needs to return before we can truly push forward market-based rate-cut expectations," he said.