Gold prices steadied near a more than nine-month low , as cautious investors awaited monthly U.S. inflation data for cues on the road ahead for the Federal Reserve’s monetary policy.
Gold prices steadied near a more than nine-month low on Wednesday, as cautious investors awaited monthly U.S. inflation data for cues on the road ahead for the Federal Reserve’s monetary policy. Meanwhile June Consumer Price Index (CPI), due later in the day is expected to have accelerated on both a monthly and annual basis, by 1.1% and 8.8%, respectively. The dollar held near 20-year highs, continuing to make greenback-priced gold less attractive for buyers holding other currencies. Benchmark U.S. 10-year Treasury yields rose, decreasing the appeal of non-yielding gold. SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, said its holdings fell 0.17% to 1,021.53 tonnes on Tuesday from 1,023.27 tonnes on Monday.
The sell-off in industrial metals continued as a resurgence of Covid cases in China along with a strong dollar (reaching a 20-year high) weighed on risk assets and overshadowed the latest stimulus hopes from China. Meanwhile China domestic aluminium production rose 4.5% YoY to 3.4mt. The majority of the rise came from the resumption of production and the commencement of new capacity in Guangxi, Gansu and Yunnan regions. Cumulative, output rose marginally to 19.5mt in the first six months of the year. Meanwhile, China’s refined zinc output fell 5.2% MoM to 488kt (primarily due to smelter maintenance), while refined lead production rose 2% MoM to 254kt in June. Copper prices hit a 20-month low on Monday as persistent worries that a recession would dampen metals demand hit a market with thin summer volumes.
Oil prices have come under pressure as demand worries continue to weigh on the sentiment. A rise in Covid cases in Shanghai will not be helping sentiment, particularly given that China continues to pursue its zero-Covid policy, which creates a fair amount of demand risk for the market. In addition to demand worries, concerns over Kazakhstan’s oil supply have eased after a Russian court said that oil flows through the CPC terminal on the Russian Black Sea coast can continue. On top of all these releases, President Biden will be visiting the Middle East later this week, which means there is the potential for plenty of noise around the US putting further pressure on OPEC to increase oil production more aggressively.
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