Gold Prices Muted as Fed Approaches; Copper Near 4-Month Low

Gold Steadies Amid Fed Meeting Anticipation

Gold prices saw a slight increase on Tuesday, stabilizing after a sharp drop in the previous session. This comes as traders remain cautious, favoring the dollar ahead of the Federal Reserve’s meeting and anticipated cues on interest rates.

Among industrial metals, copper prices continued to decline due to ongoing concerns about slowing demand from China. Additionally, the prospect of increased copper production from a joint deal between BHP and Lundin Mining to acquire Filo Corp and expand South American projects also added downward pressure on copper prices.

Gold faced pressure from an overnight increase in the dollar, driven by some long positioning ahead of Wednesday’s Fed rate decision. Spot gold rose by 0.1% to $2,387.98 an ounce, while gold futures for December delivery increased by 0.2% to $2,431.35 an ounce by 00:25 ET (04:25 GMT).

Gold Steadies, Awaiting Fed’s Rate Cut Signals

The yellow metal steadied after experiencing sharp swings in recent sessions, having briefly hit record highs earlier this month due to some safe-haven demand.

However, gold was pulled back from these record highs as the market’s focus shifted to U.S. interest rates. While lower rates generally benefit precious metal prices, any indications of rate hikes present additional risks to the sector.

This cautious sentiment kept traders leaning towards the dollar, with the Fed set to begin a two-day meeting later on Tuesday.

The central bank is widely expected to keep rates unchanged at the end of the meeting on Wednesday. However, any hints about when it might start cutting rates will be closely watched.

Markets are broadly anticipating a 25 basis point cut in September, but the likelihood of further rate cuts remains uncertain.

Other precious metals also rose but were still recovering from steep losses in recent sessions. Platinum futures rose by 0.3% to $962.55 an ounce, while silver futures increased by 0.7% to $28.055 an ounce.

Copper Near 4-Month Low Amid China Concerns and Higher Output Outlook

Benchmark copper futures on the London Metal Exchange fell by 0.5% to $8,980.0 a tonne, while one-month copper futures decreased by 0.9% to $4.0585 a pound. Both contracts are near four-month lows.

Copper has been experiencing steep losses over the past month as persistent concerns about slowing Chinese demand have negatively affected market sentiment towards the metal. Purchasing managers index data expected on Wednesday is anticipated to provide further insights into China’s economic outlook.

Additionally, the outlook for increased supply has also weighed on copper prices.

BHP Group Ltd, the world’s largest miner, and Canada’s Lundin Mining Corporation announced a $4 billion joint deal to acquire South America-focused copper miner Filo Mining Corp, with plans to expand its projects in the region and boost copper production.

Risk Warning: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 76.87% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.

Disclaimer: This text constitutes marketing communication. It is not any form of investment advice or investment research or an offer for any transactions in financial instrument. Its content does not take into consideration individual circumstances of the readers, their experience or financial situation. The past performance is not a guarantee or prediction of future results.