gold prices

Gold prices experienced a slight increase on Wednesday, remaining close to a three-week high, as market participants speculated that the Federal Reserve was nearing its peak interest rates.

Investor attention turned towards upcoming consumer inflation data, resulting in a shift away from the dollar and towards other rate-sensitive assets, including stocks and commodities.

This change in investor sentiment proved advantageous for gold. Spot gold rose by 0.1% to reach $1,933.87 per ounce, while gold futures saw a 0.1% increase, reaching $1,939.00 per ounce by 20:13 ET (00:13 GMT).

The weakening of the dollar further bolstered the value of gold, with the greenback hitting two-month lows on Wednesday.

Market participants are now eagerly awaiting the release of the U.S. consumer price index (CPI) inflation data for June, which will likely provide insight into the effects of fluctuating gasoline prices. While headline inflation is expected to have dipped, core CPI is anticipated to remain stable.

The persistence of inflation is widely anticipated to result in additional interest rate hikes by the Federal Reserve, with an expected 25 basis point increase during the end-of-July meeting. Recent statements from Fed officials reaffirm that while peak interest rates are on the horizon, there will still be further rate hikes in the near future. U.S. interest rates are also projected to remain elevated for an extended period.

Although the prospect of the Fed concluding its rate hike cycle provided support for gold, the anticipation of higher rates over a prolonged period may constrain any significant gains in the precious metal due to the increased opportunity cost associated with holding bullion.

This week, market attention will also be focused on remarks from various Fed officials, including Neel Kashkari, the president of the Minneapolis Fed, and Loretta Mester, the president of the Cleveland Fed.

Copper Caught Between Global Growth Concerns and Potential Chinese Stimulus Measures

Copper prices exhibited minimal movement on Wednesday, primarily influenced by worries that higher interest rates could dampen industrial activity worldwide. However, the possibility of improved demand from China, the leading copper importer, along with a weaker dollar, provided some support to copper prices.

Copper futures stabilized at $3.7737 per pound.

On Wednesday, the China Securities Journal, a media outlet affiliated with the Chinese Communist Party, reported that Beijing is likely to implement increased stimulus measures to bolster the economy. This follows a series of discouraging economic indicators from China, suggesting a slowdown in post-COVID economic recovery, which consequently affected copper prices.

The anticipated implementation of additional stimulus measures, particularly those targeting the property sector, is expected to revitalize the Chinese economy and subsequently drive copper demand.


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