🐂 Not all bull runs are created equal. November’s AI picks include 5 stocks up +20% eachUnlock Stocks

Gold sees some relief as dollar falls, rate hike fears cloud outlook

Published 2023-08-18, 12:34 a/m
© Reuters.
GC
-
HG
-
US10YT=X
-

Investing.com -- Gold prices rose slightly on Friday, recovering from a five-month low as the dollar saw some profit taking, although concerns over higher U.S. interest rates kept metal markets under pressure.

Prices were set for a fourth straight week of losses, as strong labor market data and hawkish signals from the Federal Reserve kept markets positioning for higher U.S. interest rates.

Spot prices also lost the key $1,900 an ounce level this week, which could herald more near-term weakness for the yellow metal.

Spot gold rose 0.2% to $1,893.05 an ounce, while gold futures expiring in December rose 0.4% to $1,922.15 an ounce by 00:00 ET (04:00 GMT). Both instruments were set to lose over 1% this week. 

Dollar dip offers some relief to gold, but outlook dim 

The dollar fell 0.3% in Asian trade amid some profit taking, after the greenback raced to over two-month highs against a basket of currencies. 

The dollar was also set for a 0.5% gain this week, as strong U.S. economic readings and hawkish signals from the minutes of the Fed’s July meeting pushed up bets that U.S. rates will remain higher for longer.

While the Fed has flagged only one more hike this year, the prospect of higher-for-longer U.S. rates bodes poorly for gold markets, given that it pushes up the opportunity cost of holding non-yielding assets. This trade had battered gold through 2022, and has so far limited any major gains in the yellow metal this year. 

Anticipation of more monetary policy and economic cues from the Jackson Hole Symposium next week also kept positioning skewed largely towards the dollar, and kept investors wary of metal markets. 

Gold was also pressured by a spike in U.S. Treasury yields, with the 10-year rate surging to levels last seen during the 2008 financial crisis. 

Copper buoyed by China stimulus hopes, but weekly losses on tap

Copper prices rose on Friday, taking some support from signals of more stimulus support in China. 

Copper futures rose 0.2% to $3.6932 a pound. But futures were still set to lose about 0.7% this week.

Prices of the red metal rebounded from an over two-month low on Thursday, after China’s central bank vowed to release more liquidity to support a slowing economic recovery.

The People’s Bank is now widely expected to cut its loan prime rates on Monday, as the world’s largest copper importer struggles with a slowing post-COVID economic recovery.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.