Gold Flat Copper Crashes as China Fears Mount: 5 Key Takeaways

CONTENTS: Gold Flat Copper Crashes as China Fears Mount

Gold prices remained relatively stable in Asian trading on Tuesday, lingering near 11-day lows as traders awaited more clarity on U.S. politics and monetary policy, particularly with the Federal Reserve meeting next week.

In the industrial metals sector, copper prices continued their decline, extending recent steep losses amid growing economic concerns about China, the top copper importer.

As of 00:33 ET (04:33 GMT), spot gold had risen by 0.1% to $2,398.38 an ounce, while gold futures increased by 0.2% to $2,399.40 an ounce.

Gold has retreated from its record highs recently, with uncertainty surrounding U.S. politics contributing to the decline. Spot prices had soared to approximately $2,470 an ounce earlier in July but have since pulled back significantly. Additionally, a stronger dollar and speculation about a potential Donald Trump presidency have also pressured gold prices.

Biden withdraws; Harris leads, Trump

Gold Flat Copper Crashes as China Fears Mount- Uncertainty over the U.S. presidential race increased this week following President Joe Biden’s decision to withdraw his reelection bid and endorse Vice President Kamala Harris. Harris is anticipated to secure enough Democratic delegates to become the party’s nominee, though her formal nomination is pending.

Despite this shift, former President Donald Trump was still leading in polls compared to Biden and Harris, according to CBS and HarrisX data from last week. However, these polls have not yet accounted for the impact of Biden’s withdrawal.

This political uncertainty has led to some safe haven investment in gold, but the strength of the dollar has tempered these inflows.

Gold remains on a strong upward trend for the year, driven by growing expectations that the Federal Reserve may start cutting interest rates from September. The central bank is expected to maintain current rates in its upcoming meeting next week.

Other precious metals declined on Tuesday, with platinum futures dropping by 0.1% to $959.65 an ounce and silver futures falling by 0.5% to $29.188 an ounce.

In the industrial metals sector, benchmark copper futures on the London Metal Exchange increased by 0.2% to $9,234.50 per tonne, while one-month copper futures declined by 0.3% to $4.1873 per pound. Both contracts were at their lowest in over 3½ months, reflecting deep losses from the previous week due to worsening sentiment regarding China, the top copper importer.

Recent data indicated a slowdown in China’s economic growth for the second quarter, and an unexpected interest rate cut on Monday did little to boost confidence. Additionally, the Chinese Communist Party’s Third Plenary Session provided few new details about further economic support.

Fears of stricter U.S. monetary policy, potentially under a Trump presidency, also contributed to caution among traders with exposure to Chinese assets.