In anticipation of important U.S. inflation data anticipated later in the day, investors made few moves in the price of gold and copper on Friday. However, the red metal was expected to have a strong week thanks to expectations that COVID limitations in China will be loosened. As a result of some safe haven trades returning to the yellow metal due to recession fears, gold prices were expected to end the week slightly lower after having recovered most of their earlier losses. Gold prices also increased as a result of recent dollar weakness.
Gold was trading at around $1,789.43 per ounce, and gold futures were stable at $1,801.25 per ounce. Both commodities, which have fallen as low as $1,765.86 an ounce, were expected to lose approximately 0.4% this week. The U.S. producer price index inflation numbers for November, which are anticipated later in the day, are currently the main focus. The number is anticipated to have decreased even further from the previous month, indicating that tighter monetary conditions and rising interest rates are having the desired effect.
But considering that the Federal Reserve is likely to continue raising interest rates in such a scenario, any indications that inflation remained sticky throughout the month might result in further market losses. Many market participants cautioned that this might lead to a recession in 2023. The more closely followed consumer pricing index, which is scheduled to be issued next week, is anticipated to follow a similar trajectory as predicted by the PPI report.
The biggest drag on gold prices this year was from rising interest rates, which caused the metal to fall from annual highs as the opportunity cost of non-yielding assets increased. Inflation, which is currently running substantially beyond the central bank’s goal range, will have a significant role in determining the direction of the Fed’s interest rate increases in 2023. On Friday, there was little movement in other precious metals. Silver futures gained 0.2% while platinum futures increased by 0.1%.
Among industrial metals, copper prices were unchanged but on track to post increases for a second week in a row due to optimism for a Chinese economic revival. Copper futures were expected to rise by roughly 0.8% this week and were trading at about $3.8818 per pound. Prices of the red metal rose this week as a result of China relaxing a number of anti-COVID transportation restrictions and testing requirements. The world’s top copper importer is expected to rebound as a result of the decision, according to the markets. A more extensive reopening may take longer than anticipated, though, as the nation continues to struggle with infection rates that have increased at an alarming rate.