Gold prices muted, copper rises on China reopening hopes

By Ambar Warrick

Investing.com-- Gold prices moved little on Monday as markets digested a flurry of hawkish central bank signals and growing recession risks, while hopes of a Chinese economic reopening helped copper prices recover a measure of recent losses.

The near-term outlook for metal markets remained dull, especially as major central banks including the Federal Reserve and the European Central Bank signaled that interest rates are set to rise even further.

Metal markets were slammed by rising interest rates this year, which drove up the opportunity cost of holding non-yielding assets - especially gold and other precious metals.

While the prospect of smaller rate hikes by the Fed did benefit gold prices in recent weeks, it is still trading down 1% for the year. Gold is also well below peaks hit during the onset of the Russian invasion of Ukraine, having largely relinquished its safe haven status to the dollar.

This has also seen the yellow metal gain little in the face of a potential U.S. recession. Investors are growing increasingly wary of high inflation and rising interest rates triggering a recession in 2023.

Spot gold was flat at around $1,793.55 an ounce, while gold futures rose 0.2% to $1,802.90 an ounce by 20:00 ET (01:00 GMT).

Bullion prices are expected to see little trading action for the remainder of the year, with market holidays and a lack of cues making for low volumes in the coming weeks.

Other precious metals rose on Monday as the dollar inched lower, with platinum futures up 0.7%, while silver futures rose 0.6%. The two metals were also trading marginally higher for the year.

Among industrial metals, copper prices surged on Monday, recovering from steep losses last week as markets bet on tightening supplies and improving demand in China going into 2023.

Copper futures jumped nearly 1% to $3.8063 an ounce.

The red metal was boosted by renewed hopes that major importer China will see an economic recovery in 2023, as it scales back its strict zero-COVID policy.

But in the near-term, markets are expected to see increased volatility as easing COVID restrictions also ramp up infections in the country.

Still, recent trade data showed that China’s copper imports grew steadily this year, as local manufacturers used recent weakness in prices as a buying opportunity.