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Metals Stocks: Gold prices decline after back-to-back session gains

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Gold futures on Thursday were headed lower, as the U.S. dollar picked up steam, weighing on the precious commodity.

“There is moderate price pressure on the metals coming from the key outside markets being in bearish daily postures—weaker crude oil prices and a higher U.S. dollar index,” wrote Jim Wyckoff, senior analyst at Kitco.com, in a Thursday note. 

A perkier dollar weighed on the commodity complex in Thursday dealings. The U.S. dollar was up 0.4% at 96.234, as measured by the ICE U.S. Dollar Index
DXY,
+0.35%
,
a gauge of the buck against a half-dozen rivals.

February gold
GCG22,
-0.55%

GC00,
-0.55%

was trading $9.80, or 0.6%, lower at $1,775.70 an ounce, following a gain of less than 0.1% on Wednesday. Bullion’s slight gain a day ago helped it notch its first back-to-back advance of the month, thus far.

Meanwhile, March silver
SIH22,
-2.22%

was trading 50 cents, or 2.2%, lower at around $21.94 an ounce, following a 0.4% decline on Wednesday.

“Judging from today’s action in precious metals, investors could indeed be discounting somewhat better U.S. inflation readings going forward,” said Edward Meir, analyst at ED&F Main Capital Markets, in a daily note.

Gold “has not done anything for much of this week,” he said. Week to date, gold prices based on the most-active contract trades around 0.4% lower.

Prices for the precious metal still traded lower in reaction to data early Thursday showing U.S. weekly jobless claims down 43,000 to a 52-year low of 184,000.

Investors are also awaiting the latest reading on U.S. inflation in the form of the consumer price index for November due out Friday.

Meanwhile, a downgrade of China property company China Evergrande by Fitch Ratings was blamed for some of the downbeat action in financial markets, with the dollar drawing haven bids and undercutting appetite for other assets that are perceived as havens.

“The downgrade may trigger cross defaults on the developer’s $19.2 billion of dollar debt,” Kitco.com’s Wyckoff wrote.  

Evergrande has been at the center of concerns about the Chinese economy, the second largest in the world, and its overleveraged property market.

Beijing is one of the world’s biggest importers of commodities including gold; so anything that could deliver an economic hit to activity may also weigh on demand estimates for assets such as gold and silver.

In other Comex dealings, March copper
HGH22,
-1.86%

lost 1.9% to $4.312 a pound. January platinum
PLF22,
-2.26%

shed 2.3% to $933.40 an ounce and March palladium
PAH22,
-4.77%

traded at $1,757 an ounce, down 5.2%.

Economic Report: Jobless claims sink to 184,000 and hits lowest level since 1969, but it’s not quite as good as it looks

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