Commodities Gold Falls and Copper Eyes, Third Week of Gains in Supply Fears

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By Ambar Warrick– Gold prices fell slightly on Friday as the dollar recovered on stronger-than-expected third-quarter U.S. GDP data, while copper prices were set for a third straight week of gains on fears that supply will tighten in the coming months. 

The sentiment towards industrial metals improved after data on Thursday showed that it was doing better under the rate increase regime than previously thought. However, the outlook is still uncertain.

There are signs of economic resilience that give the Federal Reserve more room to continue raising interest rates at an aggressive pace. This increased the and, which caused metal prices to drop. 

Thursday’s data also cooled expectations that the Fed will soften its pace of interest rate hikes in December, with traders raising their expectations for a 75 basis point (bps) hike. The trend could be bearish for gold prices due to the expectation of higher U.S. interest rate.

It is widely expected that the central bank will next week raise its fourth annual interest rate. 

Rising interest rates in 2018 caused a decline in Bullion prices. The opportunity cost of gold, which is not yielding any returns, was significantly increased.  

The price of an ounce fell 0.1%, to $1,661.86 per ounce. However, they were unchanged at $1.665.80 per ounce by 1959 ET (23.59 GMT). Due to an easing dollar, both instruments ended the week slightly higher.

Copper prices did better this week. They were set for a 3rd consecutive week of gains with an increase of 1.5%. 

The red metal’s prices have largely ignored concerns about China’s slow production and are now focusing on a possible supply shortage. The U.S. sanctions against some Russian producers and a slowing copper production in Chile are expected to tighten copper supply over the next few months.

As many countries try to shift away from fossil fuels, the demand for the red mineral is expected to rise. A rush to copper is also expected due to the growing demand for electric cars. 

Trafigura, a major commodities trader, recently warned that copper supplies are not sufficient to meet this demand explosion. 

Friday’s drop in price was 0.2%, to $3.5215 per Pound. 


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