In Asian trading on Thursday, gold prices experienced a notable decline despite an uptick in risk aversion across global markets, as investors turned to the Japanese yen. This move marked a departure from the traditional safe haven demand for gold amidst turbulent market conditions.
Meanwhile, broader commodity markets continued their downward spiral, with copper prices plummeting to nearly a four-month low. The persistent downturn was fueled by ongoing apprehensions surrounding China, the largest importer of copper, amidst lackluster economic indicators. Reports of sluggish manufacturing activity from major economies including the U.S., Germany, and Japan further exacerbated concerns regarding the outlook for copper.
Spot gold depreciated by 0.9% to $2,376.11 per ounce, while August gold futures fell by 1.7% to $2,375.40 per ounce as of 00:52 ET (04:52 GMT).
Gold Retreats Amid Yen’s Favorable Safe Haven Status and Rate Hike Speculations
Despite a significant decrease in global risk appetite, gold struggled to attract safe haven demand, with investors favoring the Japanese yen instead. The USDJPY pair, reflecting the yen’s strength against the dollar, dropped to its lowest level in over two months on Thursday.
The yen’s resurgence was bolstered by recent market observations suggesting a reduction in short positions, potentially influenced by suspected interventions in the currency markets by Tokyo. Speculations surrounding a forthcoming interest rate hike by the Bank of Japan also contributed to the yen’s appeal, particularly in light of recent indicators indicating resilience in Japan’s economic performance.
However, both gold and other metal markets failed to capitalize on the weakening dollar, which receded ahead of key economic data releases in the U.S. Scheduled reports include second-quarter gross domestic product figures due later on Thursday, and the PCE price index data, which serves as the Federal Reserve’s primary inflation measure, expected on Friday.
Elsewhere in the precious metals sector, platinum futures dipped by 1.1% to $949.60 per ounce, while silver futures experienced a notable decline of 4.2% to $28.098 per ounce, partially unwinding recent gains.
Copper Prices Deepen Losses Amidst Demand Concerns
On the industrial metals front, copper prices extended their decline on Thursday, facing intensified selling pressure due to mounting apprehensions about global demand trends.
Benchmark copper futures on the London Metal Exchange fell by 1.6% to $8,960.50 per tonne, breaching the $9,000 mark for the first time since early-April. One-month copper futures registered a 0.6% decrease, reaching $4.0540 per pound.
Both contracts sustained significant losses over recent sessions, driven by ongoing worries regarding demand in China, following a series of disappointing economic reports from the country.
Moreover, concerns over a slowdown in demand were compounded by lackluster manufacturing activity data from key economies including the U.S., Japan, and Germany, underscoring the prevailing challenges faced by the industrial sector.
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