Copper continues to climb while gold stagnates under Fed uncertainty

On Wednesday, the gold price barely changed as the markets braced themselves for a Federal Reserve meeting, while copper prices continued their recovery from six-month lows. The dollar suffered this week due to disappointing U.S. economic statistics, which led to speculation that the Fed wouldn’t have enough room to continue rising interest rates. This led to some support for the yellow metal. However, this support was only temporary as the dollar recovered amid apprehension about the Fed’s upcoming move.

Even if the Fed decides to halt its current rate hiking cycle, it is anticipated that it would keep interest rates higher for longer, which is bad news for non-yielding assets like gold. Fed Fund futures prices demonstrate that markets are factoring in a probability of almost 82% that the Fed will keep rates unchanged next week. Gold futures were down 0.1% to $1,979.65 per ounce, while spot gold was unchanged at $1,963.51 per ounce.

Even though demand for safe-haven assets was pummelling by a succession of mediocre data releases over the past month, the yellow metal has only experienced modest safe-haven demand. However, if there is a recession in the US and Europe this year, gold demand may eventually increase. This week’s economic news includes data on several significant economies, beginning with Australia’s and Japan’s first-quarter GDP figures. Also anticipated this week are reports on Chinese inflation and trade.

Other precious metals experienced a small increase on Wednesday. Silver prices rose 0.1% and platinum futures increased by 0.3%, continuing their rebound from recent lows of over two months. Copper prices among industrial metals pushed higher after appearing to have bottomed out at six-month lows in May. Additionally encouraging for the red metal were some upbeat economic statistics from China.

After gaining more than 1% in the previous session, copper futures increased by 0.2% to $3.7757 per pound. The world’s top copper importer, China, is expected to release trade data later in the day, so attention is now entirely focused on that country. Chinese imports of raw materials fell precipitously in April as the post-COVID economic recovery stalled, which raised concerns about this year’s expected robust demand for raw materials.

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