Gold prices bounced back the $1,800 level on Tuesday, having fallen below key levels earlier in the day as concerns over higher interest rates and a possible global recession next year prompted investors to seek the US dollar and Treasury yields, with the broader metal market also weakening.
Spot gold gained 1% to $1,807.24 per ounce after losing 0.1% to $1,785.46 per ounce earlier in the session, while gold futures rose by 1% to $1,816.75, having dropped by 0.2% to $1,794.60 earlier.
Copper prices traded on more stable grounds than their peers amid ongoing expectations that economic recovery in China would drive demand for the red metal. Copper futures added 0.1% to $3.79 per pound.
Further Pressure on Gold Expected
A steady greenback and a surging 10-year US Treasury yields weighed on bullion prices with a lack of buying, as the yellow metal loses its safe-haven title to the US dollar this year.
Gold prices were a tad lower for this year and have stumbled significantly from highs hit during the early days of the Russia-Ukraine conflict.
The dollar index last stood 0.6% lower, while 10-year US Treasury yields were up 3.6%.
The recent selling pressure on gold was due to a series of hawkish central bank statements in the previous week, which signaled that interest rates would continue increasing in 2023.
That possibility could further pressure gold prices and other metals, as higher interest rates weaken the metals market by raising the opportunity cost of owning non-yielding assets.
Furthermore, investors have expressed concern over a potential global recession next year, mainly because of high inflation and surging interest rates.
Uncertainty over a recession has also dimmed the outlook for copper, with sluggish economic activity worldwide seen offsetting major importer China’s demand rebound.
Slowing economic expansion is expected to determine the final trading weeks of this year amid a lack of other indicators. In addition, fewer trading volumes are expected due to several market holidays.
