Global gold prices dropped almost 1% in intraday trade on Tuesday, as investors resorted to profit-booking after the precious metal hit a three-month high in the previous session. However, expectations that the US Federal Reserve might not raise the interest rate this year put a lid on losses.
Spot gold lost 0.9% at $1,153.70 an ounce at 1130 GMT, while US December gold futures dropped $11.10 an ounce to $1,153.40. In Delhi, gold prices declined Rs 70 to Rs 26,800 per ten grams, tracking the global cues.
Spot gold prices had scaled a three-month peak of $1,169 on Monday as investors wagered that the Fed would decide against raising the rates anytime soon. Fed governor Lael Brainard said on Monday that the US central bank should desisit from any rate hike until it was clear that a global slowdown, trouble in China and other risks won’t drive the US economic recovery off track.
The precious metal has also risen almost 5% since October 2 when a gloomier-than-expected US nonfarm payrolls data prompted investors to bet a Fed rate hike only in 2016. Any hike in the interest rate strengthens the dollar and dampens the shine of the precious metal, considered a safe-haven asset and also a hedge against inflation. Moreover, as a non-interest-paying asset, gold had also benefitted from ultra-low interest rates following the financial crisis, but fell to five-and-a-half-year year this year on mounting expectations that US rates would rise for the first time in almost a decade.
Gold failed to get much support in the physical market on Tuesday due to the lack of adequate purchases in Asia, particularly in China.
Silver lost 1.1% at $15.66 an ounce, while platinum dropped 1.9% to $975.25 an ounce and palladium was down 0.9% at $686.25 an ounce.
Oil supply glut to continue
Oil prices held steady on Tuesday after the International Energy Agency (IEA) projected a supply glut would continue through 2016, as some key producers would maintain output despite a slowdown in demand growth.
Brent crude gained 24 cents a barrel at $50.10 by 1210 GMT, while the US WTI crude was up 12 cents at $47.22 per barrel. The North Sea crude variety plunged to a low of almost $42 a barrel in August, from as high as $115 in June 2014. It rose to above $54 at the end of last week on signs of declining production in the US, before easing down again this week.
Copper slips again
Copper prices dipped again on Tuesday, as a mixed bag of data stoked fresh concerns about the apetitite of top consumer China. Benchmark copper on the London Metal Exchange lost 1.2% to $5,253 a tonne by 1020 GMT.
Earlier, fresh data showed China’s overall exports as well as imports declined in September, although monthly copper imports jumped by a third to a 20-month peak last month. Still, the country’s copper imports were down 5.3% so far in 2015 from a year before.
Copper had risen 3.5% in the past two sessions in a broader metals rally stoked by reports that Glencore could cut zinc output by 500,000 tonnes. The mining giant had last month declared that it was suspending some of its copper operations.