Metals Stocks: Gold ends higher for the week, but falls for the month and quarter on strength in the U.S. dollar


Gold futures climbed on Friday to post a gain for the week, shrugging off rising inflation in Europe and the U.S., as the dollar traded below a 20-year high reached earlier this week.

Overall strength in the U.S. dollar, however, on the back of aggressive monetary policy tightening by the Federal Reserve, as the central bank continues its efforts to tame inflation, pushed dollar-denominated prices for the metal lower for the month, as well as the quarter.

Price action
  • Gold futures GCZ22, +0.02% for December delivery rose $3.40, or 0.2%, to settle at $1,672 per ounce on Comex, the highest finish since Sept. 22. Prices for the most-active contract ended 1% higher for the week, but they fell 3.1% for the month — down a sixth straight month — and lost 7.5% for the quarter, according to Dow Jones Market Data.
  • December silver futures SIZ22, +1.49% advanced 33 cents, or nearly 1.8%, to $19.039 per ounce, with prices scoring gains of 0.7% for the week and 6.5% for the month, but down nearly 6.5% for the quarter.
  • Palladium PAZ22, -1.70% for December delivery fell $28.90, or 1.3%, to $2,182.20 per ounce — posting a gain of nearly 14% for the quarter, while January platinum PLF23, -0.43% shed $1.10, or 0.1%, to $859.10 per ounce, settling with a quarterly loss of 4%.
  • Copper futures HGZ22, -0.59% for December delivery fell by a penny, or 0.2%, to $3.4125 per pound, down 8% for the quarter.
What’s happening

Gold ended Friday at its highest level in just over a week despite another batch of worrying inflation data out of the eurozone, which showed consumer-prices are rising at their fastest pace since World War II, one day after an inflation report out of Germany revealed something similar.

See: Eurozone Inflation posts new record high of 10.0% in September

Data in the U.S. meanwhile, showed that the personal-consumption price index, a key gauge of U.S. inflation, rose a mild 0.3% in August, but prices are still going up at the fastest pace in 40 years.

Lately, movements in the price of gold and silver have been dictated mostly by the relative value of the U.S. dollar along with rising Treasury yields.

Gold’s decline for the month and quarter really has to do with the strength in the dollar, said Jason Teed, co-portfolio manager of the Gold Bullion Strategy Fund QGLDX, -0.05%, adding that if you look at the U.S. dollar index for the last quarter, gold and currency have been moving inversely to each other.

For the third quarter, gold futures based on the most-active contract lost almost 8% lower, while the ICE U.S. Dollar Index DXY, -0.00% has gained over 7%. The dollar index on Friday traded below its 20-year high of 114.78, reached on Wednesday.

The dollar has moved up because inflation is higher, and the Federal Reserve can raise interest rates higher than other developed countries in its attempts to tame inflation, making our currency more attractive, Teed, who’s also director of research at Flexible Plan Investments, told MarketWatch.

The outlook for gold prices is difficult to gauge, he said, but there’s “additional room” for further price declines as long as rates haven’t topped out.

Teed emphasizes that he doesn’t see gold starting to recover until inflation numbers come down to a point where the Fed can “take their foot off the brakes” and rates either “discontinue” moving up, or come down — but that’s many months off.

Once inflation sees a meaningful turnaround, then there wouldn’t be much of a headwind for gold and that may be a good time to buy the metal, he said.

Read: Silver is outperforming gold this month, and that’s just the start

Also see: Supply ‘lag’ helps lithium triple its prices in a year

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