Metals Stocks: Gold finishes slightly higher, but settles below $1,800 for a third straight session

Gold finished Monday with a gain, finding modest support after suffering the sharpest weekly slump since late November, but prices still marked a third straight settlement below the key $1,800 mark.

With a slight recovery in the U.S. dollar, slightly higher U.S. Treasury yields and a “good measure of risk off flowing from commodities and global equities,” gold saw “technical and fundamentals resistance at the $1,800 level to start the new trading week,” analysts at Zaner wrote in Monday market commentary.

February gold GCG22, +0.14%   GC00, +0.14% edged up by $1.40, or nearly 0.1%, to settle at $1,798.80 an ounce. That marked a third consecutive settlement below $1,800 and followed a 1.7% weekly slide for the commodity — the steepest weekly decline since Nov. 26.

Meanwhile, March silver SIH22, +0.29% added 5 cents, or 0.2%, to settle at $22.462 an ounce, after a 4% weekly loss put in on Friday.

In Monday dealings, the U.S. dollar strengthened, with the ICE U.S. Dollar index DXY up 0.3% at 95.974, pressuring prices for dollar-denominated gold prices, while 10-year Treasury note yields TMUBMUSD10Y, 1.777% rose to 1.782%, dulling interest in the yellow metal, which doesn’t bear any interest.

“With global bond yields hovering near pre-pandemic highs, gold prices are not performing too terribly,” said Edward Moya, senior market analyst at OANDA, in a market update.

““With global bond yields hovering near pre-pandemic highs, gold prices are not performing too terribly.””

— Edward Moya, OANDA

The U.S. Federal Reserve can “control the short-end of the curve, but the back-end is a different story,” he said. “The balance sheet runoff is the big question mark and that will likely drive the flattener and have many investors needing an alternative safe-haven such as gold at some point this year.”

Now that the central bank is “rushing to get rates to neutral and to start shrinking the balance sheet, which means the yield curve could flatten more and that is good news for gold,” Moya explained.

Gold prices topped $1,800 in intraday trading Monday, but haven’t settled above that level since Wednesday.

Kinesis Money analyst Carlo Alberto De Casa wrote that a trade above $1,800 is a positive sign for bullion but noted that he is looking for the yellow metal to push toward resistance of around $1,830 to confirm its strength.

“From a technical point of view, a surpass of the $1,800 mark would denote strength, even if we would have a clear positive signal only with a return of prices above the resistance zone of $1,830,” he wrote.

On Friday, gold managed to log a gain after a report on the U.S. labor market showed that the country created 199,000 new jobs in December, far short of estimates for more than twice that figure. The unemployment rate, however, fell to a pandemic low of 3.9% from 4.2%.

Gold and other precious metals have been pressured by prospects of tighter monetary policy from the Fed and it is unclear what, if any impact, the Friday figures will have on the central bank, which next meets Jan. 25-26.

See: Jekyll-and-Hyde U.S. jobs report not as ugly as it looks

Commodity investors may be looking out for data on inflation, starting with a reading of the consumer-price index on Wednesday and an update on U.S. retail sales on Friday, which could influence trade in metals.

Other Comex metals declined, with March copper HGH22, -1.27% down 1.3% at $4.352 a pound. April platinum PLJ22, -2.30% fell 2.4% to $933.60 an ounce and March palladium PAH22, -0.81% settled at $1,909.20 an ounce, down nearly 0.7%.

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