Gold prices were slightly changed on Tuesday, trading on critical support levels as the US dollar fell from its recent record peaks, while copper weakened on uncertainty about China’s lower metal demand.
Spot gold tumbled 0.01% to $ 1,650.49 per ounce, maintaining moderate increases from Monday. On the other hand, gold futures were down 0.5% to $ 1,655.15 per ounce.
Copper prices extended losses amid the growing possibility that demand from China, the red metal’s biggest importer, is losing momentum.
Copper futures slipped 1.1% to $3.37, having shed 0.5% at the start of the week.
Anglo-Australian mining giant Rio Tinto Ltd. projected fewer iron ore shipments this year, hinting at weaker industrial activity worldwide, especially its biggest client, China.
Gold’s Outlook Remains Under Pressure
Gold prices found support on the greenback’s decline, as a set of robust earnings data on Wall Street strengthened investors’ appetite for riskier assets, prompting them to withdraw from the dollar. However, assets such as stocks and foreign exchange (forex) benefited more from the trend.
Major Wall Street companies providing earnings that beat expectations also resulted in a huge buying of assets at reduced prices after stock markets stumbled in the previous week.
Still, uncertainty continues to surround the yellow metal’s outlook due to the potential of higher US interest rates, particularly with inflation staying close to 40-year highs.
The Federal Reserve expects the rates to end higher than those observed in the 2008 financial crisis amid an economic outlook that is increasingly growing less optimistic.
Markets are seeing a near 100% likelihood that the US central bank will make a 75-basis point interest rate hike for the third time in November.
Gold prices posted sharp losses this year, with the precious metal almost reaching two-year lows recently, as surging US interest rates drive the opportunity cost of investing in gold.
Many other precious metals were also put in similar situations, with the greenback acquiring a large part of safe-haven demand.
