Gold in a Holding Pattern, Copper Slips on China Jitters

By Ambar Warrick

Investing.com-- Gold prices kept to a tight range on Thursday amid mixed signals over U.S. monetary policy, while Copper prices fell after a profit warning from a major Chinese property developer drove more concerns over demand.

Spot gold rose 0.2% to $1,765.65 an ounce by 22:51 ET (02:51 GMT), while gold futures rose 0.15% to $1,778.75. But both instruments were trading largely within a $1,750 to $1,810 range seen over the past two weeks.

Gold prices had slipped on Wednesday after the minutes of the Federal Reserve’s July meeting showed that most members supported more rate hikes to bring down inflation. While the central bank intends to eventually reassess its pace of tightening, it indicated that it is likely to keep hiking rates at a sharp clip until inflation is well within its 2% target range.

The dollar index rose after the minutes, as did Treasury yields. The Fed hiked rates by 0.75% last month, with traders now split over a 0.5% or 0.75% hike in September.

While data last week did show that U.S. inflation had likely peaked, Fed members indicated that it was still far too high to consider reducing the pace of monetary policy tightening.

Strength in the dollar weighed on most metal prices. Platinum futures fell 0.4%, while silver futures lost 0.6%.

In industrial metals, Copper futures fell 0.2% after Country Garden Holdings Company Ltd (HK:2007), one of the largest property developers in China, flagged a severe profit drop due to a worsening real estate market.

An extended slowdown in China’s real estate market is likely to impact broader economic activity in the country, which in turn could impact demand for commodities. The country is the largest copper importer in the world.

Nickel futures sank 1.2% on Thursday, while zinc lost over 4%. Iron ore prices are also trending lower.