Gold prices kicked off the first trading session of 2023 on Tuesday by settling at their highest in more than six months, bolstered by lower bond yields and expectations about more central-bank buying.
Other precious metals touched notable levels, including silver, which saw the most-active contract reach its highest intraday price since April, while platinum reach its highest intraday level since March.
Price action
- Gold prices due in February GC00, +0.98% GCG23, +0.98% advanced $ 19.90, or 1.1%, to settle at $ 1,846.10 per ounce on Comex. Prices for the most-active contract ended the session at the highest since June 16, FactSet data show.
- March silver SI00, +0.73% SIH23, +0.73% climbed 20 cents, or 0.8%, to $ 24.236 per ounce after an intraday high at $ 24.775, the highest for a most-active contract since mid-April.
- April platinum PLJ23, +1.27% advanced $ 10.40, or 1%, to $ 1,093.30 per ounce following a high at $ 1,108.70, the highest intraday price for a most-active contract since the first half of March. The precious metal recorded its strongest quarterly advance since 2008 in the three months ended Dec. 31.
- March palladium PAH23, -5.48% dropped $ 105.10, or nearly 5.9%, to $ 1,692.90 per ounce.
- March copper HGH23, -1.19% lost 4 cents, or almost 1.2%, to $ 3.7665 per pound.
Market drivers
“Fear and doubt across wider financial markets mean gold and silver have begun 2023 with a typical New Year surge, attracting speculative inflows as traders see weak growth, high inflation and a worsening geopolitical outlook ahead,” Adrian Ash, director of research at BullionVault, wrote in Tuesday commentary.
Gold and silver prices touched their highest intraday levels in months Tuesday with the outlook for precious metals improving markedly recently, analysts said.
Prices for the precious metal advanced despite a stronger U.S. dollar as traders focused instead on lower Treasury yields, while purchases by the People’s Bank of China has inspired hope among traders that some central banks might increase the share of their reserves allocated to gold.
“Central bank purchases might be another factor, following reports last month that the People’s Bank of China has started to increase its gold reserves,” said Marios Hadjikyriacos, senior investment analyst at XM.
The ICE U.S. Dollar Index DXY, +1.02% rose 1% to 104.571, while the 10-year yield TMUBMUSD10Y, 3.786% dropped 8.8 basis points to 3.789%.
The gains for gold and silver are “surprising” given strength in the dollar, said Edward Meir, founder of Commodity Research Group, in commentary written for Marex. “We think something will have to give in the unusual dollar/gold move and suspect it will be the dollar that will decline first, as opposed to gold selling off, given that the U.S. Treasury market is not all that dollar-friendly” in Tuesday trading.
BullionVault’s Gold Investor Index, which measures the balance of net buyers over net sellers are a proportion of all users at BullionVault, fell to an 11-month low of 53.3 in December, while the Silver Investor Index showed a “series-record low” of 47.5, according to Ash. That showed more sellers than buyers last month.
Still, in the last three months silver prices have climbed by nearly one-third against the dollar, and gained well over 20% priced in other currencies, said Ash, while gold prices on Tuesday hit roughly seven-month dollar highs.
Precious metals offer an obvious trade for 2023’s stagflation consensus, Ash said. However, only derivatives have shown inflows so far, with physical buyers and exchange-traded fund holdings both backing off into the start of the New Year, he said.