By Ambar Warrick
Investing.com-- Gold prices recovered sharply from a six-week low on Tuesday as a worsening energy crisis in Europe drove up safe-haven demand, while copper extended gains on expectations of more Chinese stimulus measures.
Spot gold jumped 0.5% to $1,718.95 an ounce, while gold futures were up 0.5% at $1,730.0 by 21:03 ET (01:03 GMT). Both instruments were recovering from a six-week low hit earlier in the month.
Demand for conventional safe havens rose after Russia shut a major gas pipeline to Europe, putting the continent at risk of a major energy crisis. The euro slumped to new 20-year lows this week, given that the crisis is expected to severely impact economic growth in the eurozone. Focus is now on a European Central Bank meeting later in the week, where the bank is widely expected to begin raising interest rates.
A rally in the dollar index also appeared to have paused on Tuesday, as traders await more details on the path of U.S. monetary policy. But expectations of more interest rate hikes by the Federal Reserve kept the dollar underpinned around 20-year highs.
Rising interest rates have weighed heavily on gold prices this year, as traders sought better yields from the dollar and Treasuries. The Fed is also broadly expected to maintain its pace of rate hikes this month.
Other precious metals also rose sharply on Tuesday. Silver added 2%, while platinum gained 0.6%. Both metals recovered from a 15-month low.
Among industrial metals, copper prices rose 0.2%, extending gains after major importer China flagged an increase in stimulus measures to shore up economic growth.
Copper Futures expiring in December rose 0.2% to $3.4665 a pound, after a nearly 2% jump on Monday.
Chinese government officials said on Monday that the country would likely increase its pace of stimulus measures in the third quarter, after the economy barely expanded in the second quarter.
The world’s second-largest economy is facing severe headwinds from COVID-19 lockdowns imposed this year, as well as a potential energy crisis.