Gold rises from steep losses after BOJ shock, copper rebounds

Investing.com -- Gold prices rose on Friday, recovering a measure of recent losses as the Bank of Japan caught markets off-guard with some hawkish signals, although strength in the dollar limited the appeal of bullion.

Copper prices also rose on Friday, marking a stronger recovery than gold as the diminished prospect of a U.S. recession boosted the red metal. Copper also benefited from speculation over more Chinese stimulus.

Markets turned somewhat risk-averse after the Bank of Japan signaled a more flexible approach to its yield curve control policy, heralding an eventual pivot away from the bank’s ultra-dovish stance.

While the move points to more eventual pressure on gold, the near-term shock from the BOJ saw markets seeking some safe havens.

Spot gold rose 0.3% to $1,951.49 an ounce, while gold futures expiring in August rose 0.2% to $1,950.15 an ounce by 01:21 ET (05:21 GMT).

Gold set for weekly losses as strong GDP boosts dollar

But while the yellow metal saw some relief on Friday, it was nursing steep losses from the prior session after data showed that the U.S. economy grew more than expected in the second quarter.

The reading boosted the dollar and pulled gold more than 1% lower, as traders bet that strength in the U.S. economy will give the Federal Reserve enough headroom to keep raising interest rates.

The data also came just a day after the Fed hiked interest rates and left the door open for at least one more hike this year, given that inflation is still trending well above the central bank’s target range.

Rising U.S. interest rates bode poorly for gold and other metals, given that they push up the opportunity cost of holding non-yielding assets. The strong GDP reading saw gold wipe out all gains for the week, with the yellow metal now trading about 0.8% lower.

Copper rises on hopes of no U.S. recession, China stimulus

Copper prices rose sharply on Friday, recovering from steep losses in the prior session. While a stronger dollar initially dented the red metal, traders bought back into copper on the hopes that the world’s largest economy will dodge a recession this year.

Copper futures rose 0.8% to $3.8773 a pound, and were trading up 1.6% for the week.

Copper prices were also boosted by the prospect of more stimulus measures in top importer China. Several top Chinese officials signaled this week that the government will roll out more policy support to help enliven a slowing economic recovery.