Metals Stocks: Gold prices end at lowest in 2 1/2 years as dollar rises in wake of Fed’s 4th jumbo interest rate hike


Gold futures tumbled on Thursday as the U.S. dollar and Treasury yields advanced after the Federal Reserve delivered its fourth 75 basis point interest rate hike since the start of the year, pushing prices for the precious metal to a two-and-a-half-year low.

Price action

Gold prices for December delivery

were down $23.40, or 1.4%, at $1,626.60 per ounce on Comex after trading as low as $1,618.30. Prices for the most-active contract haven’t traded at levels this low since April 2020, according to Dow Jones Market Data.

Silver prices for December

delivery were off 22.9 cents, or 1.2%, at $19.365 per ounce.

Palladium for December

was off $48.60, or 2.6%, at $1,801.50 per ounce, while platinum for January

was down $24.60, or 2.6%, to $926.30 per ounce.

December copper

lost 4.5 cents, or 1.3%, to $3.242 per pound.

What’s happening

“The Fed aftermath is leading to pain for bullion as Fed Chair Powell has signaled rates will be much higher,” said Edward Moya, senior market analyst at OANDA, in a market update. “The peak in the dollar was potentially going to be put in place, but…Powell said they are worried more about doing too little on inflation than too much.” 

The central bank on Wednesday raised its benchmark interest rate by 0.75 percentage points to a range of 3.75% to 4% — the highest level in 15 years.

Powell acknowledged in his post-meeting press conference that at some point “it will be appropriate to slow the pace of increases,” but he also said the Fed’s benchmark rate was likely to end up “higher than previously expected.”

Read: Fed says it may hike interest rates at slower pace, but destination is now 5% or higher

“Gold and silver turned sharply lower yesterday after Fed Chair Powell delivered a hammer-blow to sentiment across markets as he managed to both pull off the idea of the Fed may indeed soon pivot to a slower pace of rate hikes, but that any talk of a pause is very premature,” said Ole Hansen, head of commodity strategy at Saxo Bank.

Treasury yields climbed, with the 10-year yield

up 8.1 basis points to 4.135%. The ICE U.S. Dollar Index
a gauge of the dollar’s strength against a basket of rivals, was up 1.1% at 112.57.

“Gold could be in trouble here as the dollar could outperform for the next month.,” said Moya. “Gold is hovering right around key support which means if prices break, momentum selling could be intense.”

Market Extra: How Fed’s Powell caught markets ‘off guard,’ extending stock selloff as Treasury yields soar

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