Gold prices slipped from their recent seven-week highs on Friday amidst speculation surrounding the Federal Reserve’s potential decision to conclude its rate hike cycle, while copper faced further decline due to concerns over China, a major importer.

The precious metal saw significant gains on Tuesday, buoyed by data indicating lower-than-expected growth in U.S. retail sales for June, hinting at potentially less persistent consumer inflation.

However, the strength of the dollar, which rebounded sharply from its 15-month lows, restrained more substantial upward movements in gold prices. The greenback is anticipated to witness increased demand ahead of the upcoming Federal Reserve meeting.

Adding to the appeal of gold were dovish signals from the European Central Bank and the Bank of England, alongside a surge in safe-haven demand amid China’s worsening economic growth.

As of 00:08 ET (04:08 GMT), spot gold declined 0.2% to $1,975.88 per ounce, while gold futures dropped 0.1% to $1,979.35 per ounce.

Federal Reserve Nearing Peak Rates, 25 bps Hike Expected Next Week

Following the softer-than-expected retail sales data, traders began factoring in a higher possibility that the Federal Reserve might announce a pause in its rate hike cycle during its next meeting.

Although the central bank is widely anticipated to raise rates by 25 basis points, it is also expected to run out of room for further increases, given signs of easing U.S. inflation and economic growth.

A potential halt in the Fed’s rate hike cycle would bode well for non-yielding assets like gold, which have been impacted by a significant rise in interest rates over the past year.

However, the gains in gold are projected to remain somewhat limited due to the expectation of higher U.S. interest rates in the long run.

Other precious metals also retreated on Wednesday, following robust gains in the previous session, with platinum falling 0.2%, and silver declining 0.1%.

Copper Losses Extend Amid China Concerns – Awaited Stimulus Measures

Copper prices continued to slide on Wednesday, marking the fourth consecutive session of losses, as worries over China, the world’s largest copper importer, intensified.

Copper futures fell 0.5% to $3.8135 per pound, after experiencing a nearly 3% drop in the past three sessions.

Earlier this week, data revealed that China’s economy experienced minimal growth in the second quarter, as the post-COVID economic recovery appeared to lose momentum.

While the country is expected to introduce additional stimulus measures to support growth, analysts questioned how swiftly the economy could rebound.

Government officials vowed to promote domestic spending, and there were reports in local media suggesting that the People’s Bank of China was planning to cut interest rates in the third quarter.


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