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Gold price falls from four-week high as Pelosi’s Taiwan trip stirs tensions
A rally in gold stalled near a four-week high as investors braced for a stormy period in US-China relations with House Speaker Nancy Pelosi in Taiwan.
Spot gold fell less than 1% on Tuesday after earlier climbing above $1,788 an ounce. The precious metal often benefits from bouts of geopolitical turbulence and Pelosi’s trip adds to tailwinds that helped gold rebound from a 15-month low. Gold rose in anticipation of her visit, but gave back its gains after she landed as China announced military drills and missile tests.
Growing fears about the global economy have aided bullion’s recent advance. Also helping: an end of outflows from gold-backed exchange traded funds after 21 days of uninterrupted withdrawals, according to Commerzbank AG analyst Carsten Fritsch. While ETF holdings were reduced by 94 tons in July — the biggest monthly outflow since March 2021 — investor sentiment may be shifting, he added.
“Recently there were three consecutive days of inflows, which could point to a shift in sentiment among ETF investors,” Fritsch wrote in a note.
Spot gold declined 0.5% to $1,763.30 at 3:41 p.m. in New York. The Bloomberg Dollar Spot Index rose 0.7% as all other precious metals fell.
Copper price expected to rebound further, poll shows
Copper prices are expected to rebound further in the coming months after heavy losses, a Reuters poll showed, as China unleashes more infrastructure spending and other stimulus for the economy.
News of more infrastructure projects and support for China’s property market boosted copper prices this week.
Copper rose 2.9% to $3.58 ($7,876) a tonne on the Comex market in New York during the Friday morning session.
“Industrial metal prices may have undershot as the market mood shifted sharply from extremely bullish to bearish,” said Julius Baer analyst Carsten Menke.
“While China’s lockdowns remain a wild card, we believe the worst in terms of Chinese growth is behind us.”
Analysts expect a tight supply situation to ease, having marked down estimates for a global deficit this year to 30,000 tonnes, less than a third of the 110,000 tonnes forecast in the April poll.
Iron ore price retreats as China’s zero-covid policy clouds demand
The iron ore price retreated on Friday as China indicated controlling covid-19 outbreaks is still a priority.
According to Fastmarkets MB, benchmark 62% Fe fines imported into Northern China were changing hands for $115 a tonne Friday morning, down 3.5%.
On China’s Dalian Commodity Exchange, September iron ore ended daytime trade 1.8% higher at 782 yuan ($116.11) a tonne, off Thursday’s four-week peak of 798.50 yuan.
“It appears to us that any change in the zero-covid policy will only happen when authorities are convinced that mutations are less virulent and vaccines/medicines are proven to be more effective. Both are unlikely to happen in the near term,” ANZ analysts said in a note.
Investors had been optimistic that more aid was on its way to revive construction projects stalled by a wave of repayment boycotts from homebuyers, but none was forthcoming during a key Politburo meeting.
Unlike during the April meeting, where leaders spoke about “supporting local governments to improve real-estate policies,” Thursday’s meeting spoke of a broader directive to “stabilize the property market,” without specifically mentioning more supportive measures. Party leaders also delivered a generally downbeat assessment of economic growth prospects.
“There’s no clear message that the central government will coordinate any property sector rescue, which is a bit disappointing,” Australia & New Zealand Banking Group Ltd. analysts, including senior economist Betty Wang said in a note.
Iron ore rebounded this week, with the benchmark 62%-grade material gaining about 15% in the spot market as of Thursday.