Gold prices remained within a narrow range on Tuesday but appeared to have established a new level of support due to the weakening dollar. Meanwhile, copper experienced significant losses due to concerns over China, a major importer.
The price of gold approached one-month highs, mirroring the decline of the dollar to its lowest point in 15 months. This downward trend in the dollar came after several reports indicating soft U.S. inflation, leading to increased speculation that the Federal Reserve was nearing its peak interest rates for the year.
Moreover, gold seemed to have found support above $1,950 per ounce, keeping it comfortably above previous lows reached earlier this year and within reach of its record high.
However, gold prices halted their ascent at these levels, eagerly awaiting fresh indicators from the central bank, particularly in anticipation of an important Federal Reserve meeting scheduled for the following week.
The potential for higher interest rates to be sustained for a longer period and the resilience displayed by the U.S. economy have limited the outlook for gold.
At 20:30 ET (00:30 GMT), spot gold stabilized at $1,955.32 per ounce, while gold futures increased marginally by 0.1% to $1,958.65 per ounce.
Dollar Remains Near 15-Month Lows, Metal Markets Exhibit Strength
The greenback lingered close to its lowest levels since April 2022 as market participants speculated that the Federal Reserve’s capacity to raise interest rates further was limited. Weakness in the dollar benefits commodities priced in this currency and suggests reduced pressure on non-yielding assets such as gold.
However, uncertainty prevails in the market regarding whether the Fed will signal a pause in its rate hike cycle, particularly due to persistently elevated core inflation. Central bank officials have provided mixed signals on this matter, with a general consensus favoring at least one more rate hike.
Precious metals, excluding gold, mostly outperformed the yellow metal over the past week. Platinum witnessed a gain of 7.2%, while silver surged over 8%. Nonetheless, both platinum and silver had experienced more significant declines compared to gold earlier this year.
Copper Suffers Substantial Losses Amid China’s Slowing GDP
Copper prices further declined on Tuesday, extending losses from the previous session, as data revealed a significant slowdown in China’s economic growth during the second quarter.
Copper futures fell by 0.1% to $3.8383 per pound after encountering a drop of over 2% on Monday.
Apprehensions over reduced global copper demand stemming from China’s decelerating growth have negatively impacted copper prices this year. The weakening real estate sector in China, a vital source of copper demand, has been a major concern affecting the metal.
However, the Chinese government is expected to increase spending on stimulus measures to bolster the economy.
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