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Metals Stocks: Gold retreats but holds above $1,800 as recent rally stalls

Gold declined on Thursday as a recent rally appeared to sputter while precious metals traders awaited more inflation data.

Price action

Gold futures  

expiring in December dropped $7.10, or 0.4%, to $1,806 per ounce.

Silver futures  

 expiring in September shed 23 cents, or 1.1%, to $20.51.

Platinum futures 

expiring in October gained $12.90, or 1.4%, to $959 per ounce, while palladium futures 

expiring in September gained $17.60, or 0.8%, to $2,263.

Copper futures

expiring in September were down 4 cents, or 1.1%, to $3.69 per pound.

What strategists are saying

Gold has staged a dramatic rebound over the past three weeks, rising from a low of below $1,680 per ounce for the most-active contract to an intraday high of $1,824 per ounce on Wednesday, after tumbling for five straight weeks.

In recent months, the yellow metal has typically traded inversely to the dollar and yields, as expectations for rapidly higher interest rates helped dull gold’s luster compared with other safe-haven assets like the dollar and Treasuries, which offer investors a modest return.

See: The Nasdaq just exited a bear market — and the Dow left correction territory — after July CPI reading

But one market strategist pointed out that the yellow metal’s weakness on Thursday seems unusual given the pullback in Treasury yields and the U.S. dollar DXY, which both retreated as Wednesday’s CPI print helped support the idea that the Federal Reserve might ease the pace of interest-rate hikes.

See: U.S. consumer price inflation surprises to downside in July

Instead, with both gold and the dollar weakening, it appears precious metals traders and currency traders are embracing dramatically different interpretations of the latest data, according to Marios Hadjikyriacos, senior investment analyst at XM.

“There is a conflict of narratives playing out in different asset classes, with forex and equities hailing this dataset as the beginning of the end in the inflation battle, whereas bonds and precious metals are not really buying it,” Hadjikyriacos said.

Investors are also looking ahead to a report on producer prices, set to be released Thursday morning.

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