Gold Falls as Risk Appetite Rises, Copper Rises to 5-Week High

Gold prices retreated on Thursday as fears of a US recession eased on soft inflation data, while copper prices held at five-week highs as the dollar retreated.

As of 2113 ET (0113 GMT), spot gold was down 0.1% at $1,789.91, while gold futures were down 0.5% at $1,805.45. Gold prices rose to a one-month high on Wednesday after data showing that inflationary pressures in the US eased in July sent the dollar lower. But they soon retreated from the peak as the data triggered a widespread rally in risk-oriented assets. Gold prices now appear caught between a weaker dollar and rising risk appetite. US producer price inflation, due at 0830 ET on Thursday, could provide further clues for the yellow metal. Producer price inflation is expected to reflect the decline in consumer prices. However, any sign that this trend is not spreading to factory prices could dampen risk appetite. Silver futures fell 1%, while platinum futures were largely unchanged. The dollar index was flat on Thursday after falling 1.1% in the previous session. Weakness in the dollar boosted industrial metals prices as bets on a smaller rate hike by the Federal Reserve in September increased. Copper futures rose 0.2% to $3.64 a pound after rising 1.7% in the previous session. Zinc and Nickel futures rose 2.5% and 4.2% on Wednesday, respectively. But the rise in industrial metals prices came despite a decline in factory activity around the world. Producer price inflation in China fell throughout July, while manufacturing activity contracted due to COVID-19 lockdowns. Industrial activity in the US and the Eurozone also declined earlier this year, following higher commodity prices and increasing supply chain issues.