Gold Prices Rise Slightly Amid Dollar Stability and Recession Concerns
Gold prices saw a slight increase in Asian trade on Wednesday, following a sharp decline in the previous session. This rise came as the dollar stabilized after recent losses, while investors remained focused on the possibility of a U.S. recession and lower interest rates.
Meanwhile, copper prices retreated after data revealed weakened copper imports in China for June, signaling subdued demand in the world’s largest copper importer.
Initially, gold benefited from safe haven demand due to a hawkish Bank of Japan and worries about a potential U.S. recession causing losses in risk-driven assets like stocks. However, a market rebound on Tuesday and Wednesday led to pressure on safe haven assets.
Gold rose 0.2% to $2,393.59 an ounce, while futures expiring in December increased by 0.1% to $2,433.70 an ounce by 00:47 ET (04:47 GMT).
Gold Faces Pressure from Stock Market Rebound
Gold prices experienced a sharp decline on Tuesday after nearing a new record high earlier in the week. The rebound in global stock markets was a major factor contributing to the downward pressure on gold, as traders returned to the market due to bargain buying and optimism about a potential shallow U.S. recession.
The possibility of further U.S. interest rate cuts, especially amidst recession fears, also supported risk appetite. However, any rate cuts are likely to bolster gold prices, as lower rates reduce the cost of investing in the precious metal.
Other precious metals also saw a rise on Wednesday, recovering from significant losses in the prior session. Silver surged 1% to $928.95 an ounce, while platinum rose 0.3% to $27.290 an ounce.
Copper Faces Challenges from Weak China Import Data
Benchmark copper on the London Metal Exchange fell 0.6% to $8,876.0 a ton, while one-month copper fell 0.1% to $4.0055 a pound. Data from Wednesday indicated a 2.9% decrease in China’s copper imports to 438,000 metric tons in July, reflecting weak demand in the country amid sluggish economic growth.
Despite this, China’s overall economic data surpassed expectations, suggesting some resilience in domestic consumption. However, the country’s exports declined more than anticipated, impacted by European trade tariffs on Chinese electric vehicles. These tariffs could potentially affect Chinese copper demand, given the metal’s use in the EV industry.