Gold Slips Below $1,700, Copper Stagnates as Fed Worries Persist

Spot gold prices traded below a key support level on Thursday, extending recent declines as concerns over more hawkish measures from the Federal Reserve continued to weigh on metals markets.

Spot gold was largely unchanged after ending the previous session around $1,697.42 an ounce, while gold futures fell 0.1% to $1,707.30 an ounce at 19:46 GMT (23:46 GMT). Both instruments fell on Thursday after US producer price inflation data confirmed that inflation in August hovered near 40-year highs. This could lead to sharper rate hikes by the Fed as it moves to combat rising price pressures. A more closely watched measure, US consumer price inflation, came in above expectations for August earlier this week. This data caused sharp losses in financial markets on Tuesday and Wednesday. Investors think the Fed could raise rates by a full percentage point next week, although they see a 75 basis point hike as more likely. Gold is currently trading about $15 above the year's lows as a series of sharp rate hikes by the Federal Reserve has pushed the dollar higher and investors seek better returns in the greenback and Treasuries. The yellow metal has also largely failed to keep pace with US inflation this year. Given that investors expect US interest rates to exceed 4% by the end of 2022, the pressure on bullion prices is expected to continue for the rest of the year. Most other precious metals experienced similar declines. Among industrial metals, copper futures were quiet after falling for two consecutive sessions. Like gold, prices of the red metal were also affected by higher-than-expected US inflation data. Rising interest rates around the world are expected to slow economic growth, which is negative for copper given its role in infrastructure development. However, the red metal could rise slightly in the near term as supply tightens due to the strike at Escondida, the world's largest copper mine. Follow Global Economic Developments on Social Media! Click here to follow Ieconomy official Facebook account! Click here to follow Ieconomy official Instagram account! Click here to follow Ieconomy official Twitter account!