U.S. Dollar Rises After Gold Ends 3-Day Winning Streak Lower‍

The yellow metal's price dropped on Thursday, following a three-day winning streak, as the strength of the U.S. dollar weighed on the yellow metal prices.

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Price action

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• The gold futures for April delivery GC00, -0.17%, and GCJ23, -0.17% fell by $4.90, or 0.3%, to settle at $1,840.50 per ounce on Comex after rising for three straight sessions until Wednesday. Compared to last month, prices fell by 5.6% for a most-active contract, the largest monthly loss for the contract since June 2021, according to FactSet data.

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• SI00, -0.55% SIK23, -0.55% SIK23, -0.55% Silver futures for May delivery fell by 19 cents, or 0.9%, to $20.901 an ounce on Tuesday.

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• Platinum futures for April PLJ23, 0.47% gained $1.40, or nearly 0.2%, to $963.20 per ounce, while palladium futures for June PAM23, -0.01% gained $7.30, or 0.5%.

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• HGK23, -2.02% copper for May delivery dropped 8 cents, or 2%, to $4.076 per pound.

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Market drivers

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Gold prices ended lower on Thursday after finding support from strong Chinese economic data and a brief drop in the dollar this week.

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“Despite the fact that gold is trapped in the grip of the U.S. dollar-driven regime, dip buyers continue to purchase gold as a hedge against the re-inflation of geopolitical risk premiums,” said Stephen Innes, managing partner of SPI Asset Management.

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ICE's U.S. Dollar Index DXY, 0.50%, which measures the strength of the dollar against a basket of rival currencies, gained 0.6% to 105.102 in Thursday's dealings.

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“Financial markets are re-priced a more hawkish outlook again for 2023 after digesting last year's steep [interest rate] hikes,” Adrian Ash, director of research at BullionVault, told Trade Algo.

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“The gold futures have managed to hold onto a gain for the week as well. The fact that the precious metal is holding firm, even as exchange-traded funds are witnessing small net outflows, "suggests that central-bank demand has returned following the price jump at the beginning of the New Year," Ash wrote. “Moreover, it highlights the strong consumer demand, particularly from the Chinese market.”

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"The recent rise in precious metals prices is encouraging - and a sign that at least for gold, the very bearish sentiment that characterized February may be abating, at least for the time being," wrote Brien Lundin, the editor of The Gold Newsletter.

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Pendulum had swung too far toward believing the [Federal Reserve] would raise rates well into the summer, he believes.

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Despite those factors, "the Fed's rate-hike crusade is likely to come to a screeching halt in the week ahead." These include a break in the equity or bond markets, a looming recession, and rising interest rates.

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According to Lundin, his original thesis going into this year, a Fed, looking for its first opportunity to pause and let the lagging effects play out, may end up being delayed by a month or two, but not until mid-year at the earliest.

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Currently, he believes that “the recent U.S. inflation data confirm my view that the Fed will have to pause, and eventually pivot if inflation is not near its 2% target by the end of the year”.

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Lundin said that such a scenario - a dovish Fed combined with a persistent inflationary environment - would be more bullish for gold than it would be for any other asset class.

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