Is the rally in gold and copper prices losing steam?
The recent rally in gold and copper prices seems to be losing momentum as both metals face pressure due to limited new stimulus measures from China and changing expectations around U.S. interest rates. Analysts suggest that without stronger economic interventions from China, prices for these metals could see further declines in the coming weeks.
Are you looking for the best trading platform? Sign-up to the best trading platform for you for FREE. Takes 2 mins.
Gold weighed down by reduced expectations for U.S. rate cuts
Gold prices have softened after strong U.S. economic data lowered expectations of substantial interest rate cuts by the Federal Reserve. Last week’s jobs report revealed a surprisingly strong labor market, with significant job gains, a drop in unemployment, and an increase in wages. This has led market participants to adjust their rate cut expectations, with most now predicting smaller reductions in interest rates by the end of the year.
Carsten Fritsch, a commodity analyst at Commerzbank, explained that while the Fed’s cuts are still expected, they will be smaller than initially thought, which has tempered some of the bullish sentiment for gold. “Market participants are now expecting 25 basis point cuts in November and December, which is less than what was initially forecasted,” said Fritsch(Investing.com).
Despite this, geopolitical tensions in the Middle East have provided some support for gold as a safe-haven asset, which has limited the metal’s price decline. Fritsch noted, “Gold is currently being pulled in different directions due to contrasting factors like strong U.S. data and heightened geopolitical risks.”
Copper rally falters amid lack of further Chinese stimulus
Copper prices, which had surged on optimism around potential Chinese stimulus measures, have faltered following disappointing news from China’s economic planners. While Beijing announced some measures to support economic growth, the absence of more significant interventions has led to concerns about the strength of the country’s recovery. China is the world’s largest consumer of copper, and any slowdown in its economy directly impacts demand for the base metal.
Copper had rallied by nearly 15% in September, with prices climbing above $10,000 per ton. However, the lack of new stimulus has since caused the metal to retreat to around $9,700 per ton. According to Commerzbank, this correction shows how sensitive copper is to developments in China. “This was a wake-up call for the market, reminding us that after the rally, prices could fall if China’s economic recovery does not pick up,” Fritsch explained .
Market outlook and technical levels
Looking ahead, analysts are closely watching key technical levels for both gold and copper. Gold is finding support around $2,600 per ounce, and a breach below this level could see the metal fall to its next support near $2,530. Copper, meanwhile, is supported around $9,700 per ton, but a further decline in demand from China could push prices lower.
In the broader context, U.S. economic data and the ongoing geopolitical risks will likely continue to influence investor sentiment for both metals. With market participants keeping a close eye on potential new developments from China, the coming weeks will be crucial in determining whether the recent rallies in gold and copper can regain momentum or continue to fade.
S&P 500 Hits Record High; Dow Gains as Longboard Pharmaceuticals Surges 51% and Tech Stocks Rise S&P 500 Reaches Record
S&P 500, Dow Notch Record Closing Highs as Crude Slumps Major Indexes Set Record Highs: The S&P 500 and Dow
Should You Buy Plug Power Stock While It’s Trading Below $4? A Closer Look at the Hydrogen Pioneer’s Future Plug
MicroStrategy Stock Rises 550% in 2024: Should You Invest? MicroStrategy (NASDAQ: MSTR) has been one of the top-performing stocks in
One of Tesla’s Biggest Bulls ‘Disappointed’ After Robotaxi Event Tesla’s much-anticipated Robotaxi event left one of its most ardent supporters