Gold steadies after two days of gains, copper rises on China bets

By Ambar Warrick

Investing.com -- Gold prices steadied on Wednesday following somewhat mixed signals on monetary policy from the Federal Reserve, while copper prices firmed after a strong rally as markets bet on a demand recovery in major importer China.

The yellow metal marked two consecutive days of small gains as it staged a recovery from a near one-month low touched last week.

Gold saw a volatile session on Tuesday after Fed Chair Jerome Powell reiterated that the central bank may need to raise interest rates further due to strength in the labor market and elevated inflation.

But Powell also acknowledged that “disinflation” had begun, and that patience was required in order to let prices cool. Markets saw this as evidence that some progress was being made against inflation, which weighed on the dollar and saw gold settle higher on Tuesday.

Spot gold was flat at $1,873.65 an ounce, while gold futures rose 0.1% to $1,886.00 an ounce by 19:27 ET (00:27 GMT).

The yellow metal plummeted from recent highs last week after data showed U.S. nonfarm payrolls ran much hotter than expected in January. The reading battered financial markets with fears that the Fed could raise interest rates more than expected this year.

But the outlook for gold remains positive for the year, with traders pricing in an eventual reversal in the Fed’s hawkish stance as U.S. economic growth cools. A potential recession is also expected to drive up safe haven demand for the yellow metal.

Other precious metals advanced on Wednesday. Platinum futures rose 0.1% to $982.90 an ounce, while silver futures rose 0.4% to $22.275 an ounce.

Among industrial metals, copper prices steadied after a sharp jump on Tuesday, amid renewed optimism over an economic recovery in China, the world’s largest copper importer.

High-grade copper futures rose slightly to $4.0708 a pound after jumping nearly 1% in the prior session. The red metal also broke a four-day losing streak on Tuesday.

Optimism over China appeared to have spilled over from oil markets, after the International Energy Agency forecast a strong recovery in Chinese crude demand this year. The forecast bodes well for commodity demand in the country after it relaxed most zero-COVID measures earlier this year.