Get 40% Off
🚨 Volatile Markets? Find Hidden Gems for Serious OutperformanceFind Stocks Now

Gold Set for Fifth Month of Losses as Fed Rate Risks Grow

Published 31/08/2022, 12:10 pm
Updated 31/08/2022, 12:10 pm
© Reuters.

By Ambar Warrick 

Investing.com-- Gold prices fell on Wednesday and were set for a fifth straight month of losses amid fears of aggressive policy tightening by the Federal Reserve, while copper rose as Chinese manufacturing activity improved slightly in August. 

Spot gold fell 0.2% to $1,721.67 an ounce by 21:56 ET (01:56 GMT), while gold futures dropped 0.2% to $1,732.85 an ounce. Both indicators were set to lose about 2.4% in August, their fifth straight month of declines after the Fed began hiking interest rates this year. 

Bullion prices tumbled on Tuesday after data showed a bigger-than-expected rise in U.S. job openings. The dollar index surged after the reading, given that strength in the labor market gives the Fed more space to raise rates aggressively.

The data also comes ahead of U.S. nonfarm payrolls, due on Friday. A strong reading is likely to sway the Fed towards more aggressive policy tightening. 

Traders are now penciling in a nearly 70% chance that the Fed will hike rates by 75 basis points in September. 

Gold has been on an extended downturn this year as a series of sharp interest rate hikes by the Fed drove up the dollar and U.S. Treasury yields. The yellow metal was hit especially hard last week after Fed Chair Jerome Powell warned that the central bank has no intention of slowing its tightening cycle. 

Among industrial metals, copper prices recovered slightly on Wednesday after data showed Chinese manufacturing activity shrank at a slightly lesser-than-expected pace in August.  

Copper futures rose 0.3% to $3.5685 a pound. The red metal was also set to gain 4% this month, snapping four straight months of declines as traders bet China will ramp up stimulus efforts this year.

3rd party Ad. Not an offer or recommendation by Investing.com. See disclosure here or remove ads .

China is the world’s largest importer of copper. Government data showed on Wednesday that the country’s manufacturing PMI read 49.4 in August, compared to expectations for a reading of 49.2. 

A reading below 50 indicates contraction. While overall business activity in China expanded in August, it did so at a slower pace than July. 

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.