By Ambar Warrick
Investing.com -- Gold prices rose slightly on Wednesday, moving further towards a 2020 record high as more signs of slowing economic growth fed into safe haven demand for the yellow metal.
Markets largely brushed off comments from Federal Reserve Bank of Cleveland President Loretta Mester that U.S. interest rates will keep rising despite weakness in the economy. Mester also suggested that rates will remain above the 5% mark for longer.
But weak manufacturing activity data, coupled with signs of cooling in the U.S. jobs market, saw investors doubt just how much economic headroom the Fed will have to keep raising rates. Weak economic indicators also pushed up fears of a looming recession, driving safe haven flows into gold.
Spot gold rose 0.2% to $2,024.81 an ounce, while gold futures rose 0.1% to $2,041.00 an ounce by 22:49 ET (02:49 GMT). Gold's spot price was now trading less than $50 from a record high of $2,072.90 an ounce, hit during the height of the COVID-19 pandemic.
Gold prices have been on a tear since early-May, as fears of a banking collapse spurred safe haven plays into bullion. While government intervention assuaged concerns of bigger banking ructions, fears of any remaining scars on the economy kept gold demand underpinned.
The yellow metal also benefited from an increasing number of bets that the Fed will have limited economic headroom to keep raising interest rates.
Data on Tuesday showed that orders for U.S.-manufactured goods fell more than expected in February, while job openings also fell. This came after a string of weak manufacturing activity indicators from across the globe on Monday.
The dollar took little support from Mester’s comments, and was trading close to two-month lows against a basket of currencies on Wednesday.
Weakness in the dollar underpinned most other precious metals, with platinum futures up 0.3%, while silver added 0.6%. Both metals were also sitting on strong gains this week.
On the other hand, fears of slowing economic growth decimated copper prices, with the red metal tumbling sharply over the past two sessions.
Copper futures were flat at a two-week low of $3.9707 a pound on Wednesday, after tumbling nearly 3% over the past two sessions. Weak manufacturing activity data from several countries, chiefly China, weighed heavily on demand prospects for the red metal.