Scan to Download ios&Android APP

Precious metals slide as US dollar gains renewed strength

09:26, 25 May 2022

Share this article
In this article:
  • Palladium

    1947.51 USD
    4.52 +0.240%
  • Platinum

    876.42 USD
    -16.74 -1.880%
  • Silver

    19.601 USD
    -0.622 -3.070%
  • Gold

    1793.69 USD
    -11.61 -0.640%

Have a confidential tip for our reporters?

Gold bars stacked in rows
Gold dropped on Wednesday morning, following a resurgence in the US dollar – Photo: Shutterstock

After days of solid gains, precious metals slipped on Wednesday morning, with gold, silver, platinum and palladium all down following a resurgence in the strength of the US dollar (DXY). 

Investors took a more cautious stance towards metals as they awaited the minutes from the US Federal Reserve’s May meeting, which are expected to shed more light on the number and size of coming interest rate hikes for the rest of the year.

The Fed has already announced a 50-basis point hike recently, with expectations of more to come in June and July.

Gold breaks five-day winning streak

In London morning trading, spot gold dropped 0.3% to $1,859.30 per troy ounce, breaking its five-day winning streak, and retreating from the two-week highs seen in the previous session, as the US dollar (DXY) advanced. However, with disappointing macro data in the US and UK, the precious metal was prevented from sliding further.

Silver dipped 0.7% to $21.90 per troy ounce, withdrawing slightly from the two-week highs of $22 per troy ounce seen in the previous trading session. Ongoing geopolitical tensions and persistent growth worries, however, went a long way towards putting a cap on prices.

US Treasury yields retreated two basis points to 2.7%, falling for the fifth consecutive trading session, as worries regarding a possible recession intesified. 

Platinum inched lower 0.9% to $946.20 per troy ounce, retreating further from the one-week high of about $950 per troy ounce seen earlier. However, the operational issues that are plaguing the top platinum miners and refiners in South Africa countered this dip, and kept the precious metal trading within a fairly tight range.

Palladium fell 0.1% to $2,005.00 per troy ounce, but still managed to put some distance between its current price and the four month-low of about $1,907 per troy ounce seen recently. Investors were also speculating that the palladium market might see some deficits down the line this year, with tightening supplies from Russia and issues with South African miners.

Copper lost 1.5% to $4.60 per pound, but still hovered around over two-week highs, as China pledged greater economic stimulus. However, increasing Covid-19 cases in the country, along with lingering economic growth woes, somewhat dampened the boost coming from this news.

Aluminum decreased 3.2% to $2,878.50 per tonne, with the base metal down approximately 25% from the record highs seen in March. Demand worries from China, as well as the country reporting a drop in factory activity in April, contributed to the downbeat sentiment.

Five things to know about metals today

Gold: Barrick Gold (ABX) has recently received a fairly average “buy” rating from 14 analysts.

Platinum: A South African labour union recently revealed that it has come to a wage deal agreement with Anglo Platinum (ANGPY)

Iron ore: Iron ore prices recently leaped following increased stimulus from China as well as lingering supply shortages.

What is your sentiment on Palladium?

1947.51
Bullish
or
Bearish
Vote to see Traders sentiment!

Copper: Copper prices have been struggling lately, pressured by economic slowdown in top consuming countries such as China.

Aluminum: Europe’s aluminum output has recently seen a fall due to the ongoing energy crisis.

Mining stock performance

Glencore (GLEN) recently announced that it will be coughing up about $1bn as a settlement against US market abuse and bribery allegations.

Rio Tinto (RIOgb)’s Madagascar mineral sands mine has recently resumed operation, following the company coming to an agreement with protestors.

Antofagasta (ANTO) recently unveiled its plans for its trolley-assist pilot project at the Los Pelambres copper mine.

BHP (BHP) recently highlighted its expectation that mining supply chain disruptions will last for years.

Anglo American (AALI)’s spinoff Thungela Resources (TNGRF) is working to remedy a toxic coal spill, following a government order.

Read more

The difference between trading assets and CFDs
The main difference between CFD trading and trading assets, such as commodities and stocks, is that you don’t own the underlying asset when you trade on a CFD.
You can still benefit if the market moves in your favour, or make a loss if it moves against you. However, with traditional trading you enter a contract to exchange the legal ownership of the individual shares or the commodities for money, and you own this until you sell it again.
CFDs are leveraged products, which means that you only need to deposit a percentage of the full value of the CFD trade in order to open a position. But with traditional trading, you buy the assets for the full amount. In the UK, there is no stamp duty on CFD trading, but there is when you buy stocks, for example.
CFDs attract overnight costs to hold the trades (unless you use 1-1 leverage), which makes them more suited to short-term trading opportunities. Stocks and commodities are more normally bought and held for longer. You might also pay a broker commission or fees when buying and selling assets direct and you’d need somewhere to store them safely.
Capital Com is an execution-only service provider. The material provided on this website is for information purposes only and should not be understood as an investment advice. Any opinion that may be provided on this page does not constitute a recommendation by Capital Com or its agents. We do not make any representations or warranty on the accuracy or completeness of the information that is provided on this page. If you rely on the information on this page then you do so entirely on your own risk.

Still looking for a broker you can trust?


Join the 400.000+ traders worldwide that chose to trade with Capital.com

1. Create & verify your account

2. Make your first deposit

3. You’re all set. Start trading