This report was created by [OXShare]
Gold prices dropped to a level not seen in over three weeks on Thursday, continuing a series of recent decreases following cautionary statements from a number of Federal Reserve officials who advised against assuming that the central bank was finished with raising interest rates.
Gold prices were on track for a fourth consecutive day of decline, influenced by the strengthening dollar and rising Treasury yields. The decrease in demand for gold as a safe haven asset has also contributed to the drop in prices, as the market perceived a reduced risk associated with the Israel-Hamas conflict.
The price of spot gold dropped by 0.1% to $1,949.38 per ounce, and the price of gold futures expiring in December fell by 0.2% to $1,954.30 per ounce at 23:41 ET (04:41 GMT). Both of these forms of gold were experiencing a decrease of over 2% for the week.
The uncertainty regarding the Fed’s actions continues, and we are eagerly waiting for Powell’s speech.
Several Federal Reserve officials cautioned this week that interest rates in the United States will stay elevated for an extended period and advised against expecting any premature rate reductions. The persistence of inflation and the durability of the American economy may even lead to further increases in interest rates throughout the year.
The remarks made by the individuals countered the belief that the Federal Reserve’s cycle of raising interest rates had come to an end. As a result, traders once again turned their attention towards assets that are influenced by interest rates, such as the dollar and Treasury investments.
Contributing to the lack of clarity, Jerome Powell, the Chair of the Federal Reserve, provided minimal hints on monetary policy during a speech on Wednesday. However, he is scheduled to give another speech at a different occasion later today.
Despite the markets perceiving his comments as less assertive, Powell has generally stuck to his stance that interest rates in the United States will stay elevated for an extended period of time. He also emphasized the necessity of further actions to decrease inflation.
This particular situation does not bode well for gold, as higher interest rates increase the cost of investing in bullion, which does not provide any returns.
Gold has been prevented from making significant progress this year by this idea, which has kept the price of the precious metal well below the desired $2,000 per ounce mark. However, gold has still experienced an increase in trading of approximately 8% in 2023.
The copper market experiences a negative impact due to China’s disinflationary shock.
Copper prices declined on Thursday among other industrial metals, as they continued to experience recent losses due to increasing indications of economic fragility in China, which is the leading importer of copper.
The price of copper futures decreased by 0.3% and is now valued at $3.6258 per pound.
China’s government records revealed a decrease in both consumer and producer inflation in October, leading to the country experiencing disinflation for the second time in 2021. These findings follow other negative indicators for the same month, such as disappointing trade data and a decline in manufacturing activity.
Concerns about the decreasing demand for copper, which has been a consistent trend this year, increased due to signs of ongoing economic weakness in the leading copper-importing country.
However, while the demand for copper in China has stayed relatively consistent, there has been a significant decline in demand from other regions due to worsening global economic conditions.