50% Off! Beat the market in 2025 with InvestingProCLAIM SALE

Gold prices mixed, copper sinks on weak China GDP target

Published 06/03/2023, 11:46 am
XAU/USD
-
XAG/USD
-
GC
-
HG
-
SI
-
PL
-
US10YT=X
-
DXY
-

By Ambar Warrick

Investing.com -- Gold prices were mixed on Monday amid some uncertainty over U.S. monetary policy, while copper prices retreated sharply as major importer China set a weaker-than-expected GDP target for 2023, undermining expectations of a strong recovery in demand.

Bullion prices were aided by a drop in the dollar last week, breaking a five-week losing spree as traders reassessed their expectations for U.S. interest rate hikes this year.

Spot gold fell 0.2% to $1,852.26 an ounce, while gold futures rose 0.2% to $1,858.15 an ounce by 19:19 ET (00:19 GMT). Both instruments rose over 2% in the past week.

Pressure from the dollar on metal markets was back in play on Monday, as the greenback steadied after a sharp drop on Friday. Benchmark U.S. Treasury yields also hovered just below the 4% level.

Markets bet that the Federal Reserve’s target rate will likely peak in the coming months, before the bank either pauses or reverses its hawkish stance due to increased economic pressure. 

But the prospect of slowing economic growth weighed heavily on copper prices, adding to pressure from a soft GDP target from China. Chinese government officials over the weekend forecast that the economy would expand by 5% in 2023, after a 3% rise in 2022.

Copper futures sank 0.5% to $4.0557 a pound.

Analysts at ING called the Chinese forecast “softer-than-expected”, stating that the government likely recognized that external demand for Chinese exports was weakening, which would in turn dent local activity. 

The forecast also ramped up fears that a recovery in China will not be as robust as initially thought, even as the country relaxed most anti-COVID measures earlier this year. 

But business activity in the world’s second-largest economy surged to pre-COVID levels in February, data showed last week. The reading had triggered strong gains in copper, which the red metal now appears to have largely reversed. 

Other precious metals were a mixed bag, amid continued uncertainty over where exactly U.S. rates will peak. Platinum futures fell 0.2% to $977.30 an ounce, while silver futures rose 0.3% to $21.308 an ounce.

Rising interest rates bode poorly for metal markets, given that they drive up the opportunity cost of holding non-yielding assets. 

Focus this week is on a testimony by Fed Chair Jerome Powell, as well as  U.S. nonfarm payrolls data for February. 

 
 

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.