Gold prices reached a two-week high and settled above the $1,900 mark as the US dollar and Treasury yields retreated. Investors eagerly awaited Federal Reserve Chair Jay Powell’s speech at the central bank’s annual policy event in Jackson Hole, Wyoming. The rally in the US dollar paused at two-month highs, and Treasury yields fell slightly ahead of Powell’s speech. Despite the increase in gold prices, the outlook for the precious metal remained uncertain due to concerns about higher US interest rates.
Gold futures on New York’s Comex settled at $1,948.10 per ounce, up 1.1% on the day. It had previously hit a two-week high of $1,949.65. While the recovery in gold prices was encouraging, they were still trading near five-month lows. Analysts warned that Powell’s speech could potentially signal higher US interest rates, which would further impact gold prices negatively. Rising interest rates would increase the opportunity cost of investing in gold, making it less attractive to investors.
Meanwhile, copper prices also benefited from the weakness in the US dollar, rising 1.4% to $3.811 a pound. Business activity in the US expanded at a slower pace in August, signaling weakening economic conditions. The outlook for China’s economy also remained under pressure, affecting copper prices. Additionally, uncertainty over further stimulus measures from China contributed to market concerns. As the world’s largest copper importer, China’s economic recovery after the COVID-19 pandemic plays a significant role in copper price fluctuations.
