Stock Market

Gold settles flat after powerful advance as consumer confidence rises to highest since April

Gold prices settled flat on Wednesday as a rally in precious metals appeared to pause after recording solid gains in the previous session.

Price action
  • Gold prices for February

    delivery settled flat, at $1,825.40 per ounce on Comex, according to FactSet data.

  • Silver prices for March

    shed 8 cents, or 0.3%, to settle at $24.19 per ounce after ending at their highest level since April on Tuesday.

  • March palladium prices

    fell $66.70, or 3.9%, to finish at $1,666.80 per ounce, while platinum prices for January

    dropped $11, or 1.1%, to settle at $1,002.

  • Copper prices due in March

    climbed 1 cent, or 0.3%, ending at $3.81 per pound.

Market drivers

Gold rose Wednesday morning after data shows consumer confidence jumped to an eight-month high in December, reflecting fewer worries about inflation and more optimism about jobs and the economy, but the precious metal ended the session roughly flat.

The Conference Board’s consumer confidence index jumped to 108.3 in December from 101.4 in November, topping a Wall Street consensus estimate of 100.5.

Bill Adams, chief economist for Comerica Bank said in a Wednesday note that consumer confidence got a huge boost from falling gasoline prices in December.

“This sets the tone for the likely path for the economy in 2023. Overall activity will likely be modestly lower than in 2022 as businesses turn more cautious on inventory purchases and slow capex plans in response to higher interest rates,” he wrote. “Inflation is likely to continue to gradually cool, with the magnitude of its slowdown highly dependent on prices of gasoline and other energy goods.”

ICE U.S. Dollar Index
 a gauge of the dollar’s strength against a basket of rivals, gained by 0.2% to 104.15, while the Japanese yen

continued to surge following the Bank of Japan’s surprise decision to loosen its grip on the country’s domestic bond market.

Gold prices peaked north of $2,000 per ounce in March before embarking on a monthslong slide as investors shunned precious metals in favor of the U.S. dollar and Treasurys, which offered their highest yields in more than a decade.

However, that trend started to shift early last month as the greenback retreated from its strongest level in decades, giving a newfound lift to gold and silver.

“Gold got a modest boost after falling inflation bolstered consumer confidence and pushed risky assets higher,” wrote Edward Moya, senior market analyst at OANDA. “It looks like gold might struggle to get anywhere close to the $1,850 level unless we see a fresh major catalyst.”

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