By Ambar Warrick
Investing.com-- Gold prices were steady on Wednesday as safe haven demand rose ahead of key U.S. inflation data, while copper prices plummeted after weak Chinese factory inflation pointed to laggard demand for the industrial metal.
As of 2246 ET (0246 GMT), spot gold prices hovered around $1,793.99 an ounce, while gold futures fell 0.1% to $1,809.95. Gold prices had risen on Tuesday, tracking a volatile session on Wall Street.
Buying into the yellow metal has been supported this week by anticipation of U.S. CPI inflation data, due at 0830 ET on Wednesday. While the reading is expected to have declined slightly from last month to an annual 8.7% rate in July, inflation is still expected to remain pinned at 40-year highs.
This, coupled with a stellar payrolls report for July, could open the door to a bigger-than-expected interest rate hike by the Federal Reserve next month.
While this scenario would be negative for gold, investors are also betting that growing recession risks across the globe will drive safe haven demand for the metal.
The United States logged two consecutive quarters of economic contraction, while China barely avoided a contraction in the second quarter. The Euro zone is also bracing for a potential recession.
Data on Wednesday showed Chinese inflation grew less than expected in July, indicating that the world’s second largest economy is still grappling with the aftermath of COVID lockdowns.
The reading- which indicated an extended downturn in Chinese factory activity- severely dented the prices of industrial metals. China's producer price index grew 4.2% annually in July, down from 6.1% in June and below expectations of 4.8%.
Copper futures dropped 0.5%, while nickel futures tumbled 0.7% after the data.
Extended weakness in Chinese factory activity has weighed heavily on industrial metals this year, despite metal imports to the country remaining steady.