Gold prices exhibited minimal movement on Thursday, as they faced pressure from the robust U.S. dollar and Treasury yields. These pressures stem from concerns that persistent inflation may compel the Federal Reserve to maintain its hawkish stance.
Additionally, data indicating resilience in the U.S. economy further dampened safe-haven demand for gold. There is a growing belief that the United States will evade a recession this year.
However, the focal point for the gold market remains U.S. interest rates, with several Federal Reserve speakers scheduled to address the matter ahead of an interest rate decision later in the month.
Spot gold experienced a modest 0.1% increase, reaching $1,919.32 per ounce, while gold futures expiring in December declined by 0.1%, settling at $1,943.30 per ounce by 00:58 ET (04:58 GMT). Both of these instruments hovered just above their 10-day lows.
One of the primary factors influencing U.S. rate concerns was Wednesday’s data revealing stronger-than-expected growth in the U.S. service sector for August. A particular point of contention was the uptick in service sector prices, which is anticipated to contribute to sustained inflation readings in the coming months.
This development, coupled with the recent surge in oil prices, revived worries that U.S. inflation would remain stubborn this year, prompting a more hawkish response from the Federal Reserve.
Although the Federal Reserve is widely expected to keep rates steady in September, it intends to maintain higher rates for a more extended period. This outlook poses challenges for gold, as higher rates increase the opportunity cost of holding bullion. Furthermore, a stronger dollar diminishes the per-ounce value of gold.
This combination has weighed on gold throughout the past year, creating an uncertain outlook for the precious metal.
Copper Prices Slide on Weak Chinese Trade Data
In contrast, copper prices faced a decline on Thursday due to Chinese trade data indicating ongoing economic fragility in the world’s largest copper importer.
Copper futures slipped by 0.4%, reaching $3.7757 per pound, marking a two-week low.
The Chinese trade data revealed that while imports and exports contracted at a slower pace than anticipated in August, they still hovered close to historical lows. Furthermore, China’s copper imports declined by approximately 5% compared to the previous year, signifying a lackluster appetite for the red metal amid deteriorating economic conditions.
In recent months, China’s copper imports have decelerated as the nation grapples with a slowdown in manufacturing and a severe liquidity crisis in its extensive property market.
