By Ambar Warrick
Investing.com-- Gold prices rose slightly from two-year lows on Tuesday as a rally in the dollar paused, while a recovery in copper was cut short by data showing more weakness in Chinese industrial activity.
Spot gold rose 0.5% to $1,629.96 an ounce, while gold futures were flat at $1,637.25 an ounce by 21:57 ET (01:57 GMT). Both instruments recovered from their lowest levels since early 2020, as pressure from the dollar appeared to have eased.
The dollar index retreated slightly after scaling a new 20-year high on Monday. A rout in most other asset classes and rising interest rates boosted the greenback’s safe haven demand, helping the currency largely overtake gold as a preferred safe haven buy this year.
Bullion prices on the other hand have plummeted from highs hit during the Russian invasion of Ukraine, as rising interest rates across the globe dented the metal’s appeal.
With gold prices falling below two key support levels in recent weeks - $1,700 and $1,650 - markets broadly expect the yellow metal to sink below $1,600 in the coming days. There appear to be few factors providing an upside for gold in the near term. Spot gold is down more than 10% this year.
Other precious metals suffered similar losses this year. Silver is down over 20%, while platinum shed 12.5%.
Focus is now on an address by Federal Reserve Chairman Jerome Powell on Wednesday for more cues on U.S. monetary policy. Powell had struck an extremely hawkish tone during the Fed’s meeting last week,
Among industrial metals, copper prices trimmed early gains on Tuesday after data showed Chinese industrial profits fell for a second consecutive month in August.
Copper futures were up 0.3% at $3.3015 a pound, after slumping nearly 2% in the prior session to a two-month low. The red metal is now close to hitting its 2022 low of $3.1355, and is trading down more than 24% for the year.
Fears that rising interest rates will dent global economic activity have weighed heavily on copper prices this year, as has a pronounced slowdown in industrial production.
Signs of prolonged economic weakness in China- the world’s largest copper importer- also weighed heavily on prices this year, as investors positioned for a demand crunch.