Metals Stocks: Gold on pace for worst day in 2 months, after suffering biggest monthly loss since September

Gold for June delivery GC00, -2.46% GCM22, -2.46% fell $45.70, or 2.4%, to $1,865.40 an ounce on Comex, on pace for its biggest daily percentage decline since March 9 when the most-active gold contract fell 2.7%, according to Dow Jones Market Data. A surging U.S. dollar was blamed in part for a 2.1% April fall, the largest in seven months. May silver SI00, -2.04% SIK22, -2.13% fell 44 cents, or 1.9%, to $22.60 an ounce.

“Gold was turned back from $1,920 before the weekend and appears poised to test last week’s low near $1,872,” said Marc Chandler, chief market strategist at Bannockburn Global Forex, in a note.

The ICE U.S. Dollar Index DXY, +0.66%, a measure of the currency against a basket of six major rivals, was up 0.6%, trading near highs last week that marked its strongest in more than seven years. A stronger dollar can be a weight on commodities priced in the unit, making them more expensive to users of other currencies.

Treasury yields, meanwhile, continued to rise, which raises the opportunity cost of holding assets that don’t offer a yield. The 10-year Treasury rate TMUBMUSD10Y, 2.993% briefly hit 3% on Monday, its highest since 2018, but was last spotted at 2.99%, according to FactSet.

“The precious metals are getting hit early this week by the bearish outside market forces of a strong U.S. dollar index that is near a 20-year high, solidly lower U.S. crude oil prices and higher U.S. Treasury yields,” Jim Wyckoff, senior analyst at Kitco.com wrote, in a Monday note.

Both the dollar and bond yields have been lifted by expectations the Federal Reserve will move aggressively in an attempt to rein in inflation running its hottest in more than four decades.

Fed policy makers will conclude a two-day meeting on Wednesday afternoon. Investors widely expect the central bank to raise the fed funds rate by 50 basis points, or half a percentage point, rather than deliver the typical quarter-point move. Investors have also been judging whether further outsize rate moves are likely in coming policy meetings.

Read: Fed’s half-percentage-point interest rate hike next week seen baked in the cake

In other metals trade, July copper HGN22, -3.05% fell 3% to $4.28 a pound.

July platinum PLN22, -0.89% lost 0.7% to trade at $933.20 an ounce, while June palladium PAM22, -4.64% shed 4.2% to $2,210 an ounce.