Gold Slips as Risk Appetite Improves, Copper Hits 5-Week High

By Ambar Warrick 

Investing.com-- Gold prices slipped on Thursday as fears of a U.S. recession were eased by soft inflation data, while copper prices stuck to five-week highs as the dollar retreated. 

As of 2113 ET (0113 GMT), spot gold fell 0.1% to $1,789.91, while gold futures were down 0.5% at $1,805.45. 

Gold prices had rallied to a one-month high on Wednesday after data showed that U.S. inflationary pressures eased in July, which dented the dollar. But they had shortly retreated from their peak, as the data triggered a widespread rally in risk-driven assets. 

Gold prices now appear to be caught between a weakening dollar and improved risk appetite. U.S. producer price inflation, due at 0830 ET on Thursday, may provide further cues to the yellow metal.

Producer price inflation is expected to mirror a fall in consumer prices. But any signs that this trend did not extend to factory prices could dent risk appetite.

Silver futures dropped 1%, while platinum futures were largely unchanged. The dollar index was flat on Thursday after plummeting 1.1% in the prior session. 

Weakness in the dollar, amid growing bets on a smaller interest rate hike by the Federal Reserve in September boosted industrial metal prices. 

Copper Futures rose 0.2% to $3.64 a pound, following a 1.7% rally in the prior session. Zinc and Nickel futures rallied 2.5% and 4.2%, respectively, on Wednesday. 

But the spike in industrial metal prices comes despite a decline in factory activity across the globe. Producer price inflation in China fell through July, while manufacturing activity contracted in the face of COVID-19 lockdowns.

Industrial activity in the U.S. and Eurozone is also declining in the wake of surging commodity prices and increased supply chain issues earlier this year.