Gold futures finished 2022 relatively flat, wiping out their losses from earlier in the year. The yellow metal enjoyed a monster rally in the fourth quarter, driven by expectations that the Federal Reserve will slow down its tightening campaign in 2023. With prices holding steady at $1,800, will the precious metal top $2,000 next year?
February gold futures rose $3.00, or 0.16%, to $1,829.00 per ounce at 19:56 GMT on Friday on the COMEX division of the New York Mercantile Exchange. Gold prices will post a weekly gain of 1.25%, a monthly boost of 0.95%, a quarterly increase of 9.6%, and a yearly dip of 0.1%.
Overall, gold prices ended the year at their highest levels in six months.
Silver, the sister commodity to gold, struggled to stay above $24 to end the year. February silver futures tumbled $0.13, or 0.54%, to $24.13 per ounce. The white metal will enjoy a weekly gain of 0.84%, a monthly rally of 3.28%, a quarterly surge of 27%, and a 2022 jump of 3.3%.
Metal commodities largely benefited from a weakening greenback. Despite its spike in the first ten months of 2022 — soaring as much as 15% — the US Dollar Index (DXY) pared its gains. The index, which measures the buck against a basket of currencies, advanced 7.83% this year. The DXY will record a weekly loss of 0.8%, a monthly decline of 1.02%, and a quarterly decline of 7.7%.
On Friday, the DXY fell 0.36% to 103.46, from an opening of 103.95.
A lower buck is good for commodities priced in dollars because it makes it cheaper for foreign investors to purchase.
The US Treasury market was mostly in the green, with the benchmark ten-year yield up 4.4 basis points to 3.879%. The one-month bill added 9.4 basis points to 4.027%, while the 30-year bond tacked on 5.2 basis points to 3.975%. The recession indicating spread between the two- and ten-year yields was around 55 basis points.
“The recent inflation data we’ve seen … shows prices starting to cool off a little bit. That’s encouraging for the metals market bulls and been part of the reason we’ve seen the rally,” said Jim Wyckoff, senior analyst at Kitco Metals, in a note. “Weaker U.S. dollar index is supporting prices, but limiting gains is a rise in bond yields today.”
Looking ahead, the outlook remains positive for gold prices, says Craig Erlam, senior market analyst at Oanda.
“The outlook may still look very positive for the yellow metal with central banks surely nearing peak interest rates and the economic outlook rather bleak but in the near term, a correction may be on the cards in the absence of another bullish catalyst,” he wrote in a research note.
In other metal markets, February copper futures were unchanged at $3.8195 per pound. February platinum futures climbed $18.70, or 1.76%, to $1,083.70 an ounce. February palladium futures fell $24.40, or 1.34%, to $1,792.00 per ounce.