Although gold futures increased to $1,765.0/oz by 0.2%, spot gold was hardly affected at $1,752/oz.
The dollar index declined from a high that was over two decades ago, which led to a little increase in the price of gold over the last couple of days. However, investors are wary of increasing their purchases of gold prior to Friday’s speech by Jerome Powell at the Symposium in Wyoming. The dollar made virtually no changes in the day.
There is little chance that the Federal Reserve will decrease its intensity of interest rate increases because investors generally anticipate the Chair to reinforce the bank’s hawkish sentiment.
In an effort to bring inflation down from a 40-year high, the Federal Reserve is expected to raise rates by 75 bps in the next month, according to roughly 61% of market players.
It has also been confirmed by various Fed officials’ pessimistic remarks that the Fed will continue its course of tightening monetary policy. This year, the Fed has increased interest rates 4 times.
The result has been a significant decline in gold prices, wiping out any gains achieved at the beginning of the war between Russia and Ukraine. The dollar became a more appealing investment than gold due to higher rates.
Copper prices amid industrial metals increased gradually, but it did not seem that a new wave of Chinese stimulus was helping much. Futures for copper increased to $3.6433/lbs.
China, which is experiencing a sharp economic downturn due to COVID-19 lockdowns, a persistent heat wave, and a looming power shortage, unveiled a stimulus plan on August 24 that will amount to about 1% of its total GDP.
Given that China is the world’s largest importer of copper, instability in the nation’s industrial sector has significantly lowered copper prices this year. The nation’s economic prospects are also anticipated to be harmed by the country’s escalating real estate turmoil.
Nevertheless, copper received some support as a result of a further interest rate drop by the People’s Bank of China (PBOC) to boost growth in the economy.