Gold shines with 4th straight gain, as economic data points to U.S. weakness

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Gold futures posted a fourth consecutive daily gain on Tuesday, as US economic data pointed to economic hurdles arising from higher inflation.

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It closed higher by $17.60, or 1%, at $1,865.40 an ounce. July Silver SIN22,
According to Dow Jones market data, both metals closed up 1.6% at $22.06 an ounce, scoring their highest settlement prices since May 6.

“The US economy is not falling apart, but the weakness it is experiencing is worse than many expected,” said Edward Moya, senior market analyst at Oanda.

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A pair of surveys released Tuesday—the S&P Flash US Services Index and the Flash US Manufacturing Index—showed that US trading in May expanded at the slowest pace in several months, driven by high inflation, continued supply crunch and customers. Reflects the effects of some moderation in demand. ,

New home sales in April also fell for the fourth straight month, falling to their lowest level since the pandemic, driven by rising prices and rising mortgage rates.

“Gold is probably not going to stop at this point as the wall of worry continues to mount on Wall Street,” Moya said in a written commentary on Tuesday. “Gold should be supported as inflationary pressures are weighed further, China’s COVID situation remains a major unknown, and Corporate America continues to ease outlook.”

Gold, which jumped after hitting a three-month low in early May, has gained as the 10-year Treasury yield TMUBMUSD10Y,
It pulled back from 3 1/2-year highs above 3.2% in recent weeks, as sell-off in equities prompted demand for the safe-haven asset.

Dollar, as measured by the ICE US Dollar Index DXY,
Meanwhile, it has retreated from nearly 20-year highs.

Gold is “benefiting from a decline in Treasury yields as well as some dollar weakness – with which it has an inverse price correlation. Treasury yields and the stabilization of the dollar, which have retreated from the peaks reached in mid-May, then This happens when the markets are in a bullish trend towards the Fed, and there are some glimmers of hope for a brighter global economic outlook, said Ricardo Evangelista, senior analyst at ActiveTrades, in a note.

Economists at Mizuho said Fed Chairman Jerome Powell’s “more temperate postmeeting tone reflects a narrow or broad consensus of committee members,” with investors watching the minutes from the Federal Reserve’s two-day gathering in May to be released on Wednesday. Securities in a Tuesday client note.

The issue, he said, is whether there is a willingness to re-evaluate policy once the Fed-funds rate drops to 2%, a potential countermeasure to those aggressively pushing for a 3% to 3.5% rate by the end of the year. As it is, he said.

July Copper HGN22, in other metals trading
Down 0.9% to close at $4.31 a pound.

July Platinum PLN22,
closed at $942.90 an ounce, down 0.8%, while the June Palladium PAM22,
It closed 1.4% higher at $1,986.60 an ounce.

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