London (awp/afp) – Gold fell over the week, weighed down by the strength of the dollar combined with galloping inflation which is rekindling fears of a hike in key central bank rates.
The precious metal hit $1,784.56 an ounce on Friday, its lowest since January.
According to Han Tan, an analyst at Exinity, gold is “weakened by the prospect of higher interest rates and aggressive rhetoric from central banks on inflation control.”
If gold is perceived as a safe haven, appreciated by investors seeking protection from rising prices, a stricter monetary policy, on the other hand, makes government bonds more profitable and more attractive than the metal.
The more aggressive tone of the American Central Bank (Fed), which increases its key rates precisely to temper the pressure on prices, thus benefits the dollar.
“The strength of the US dollar and expectations of higher interest rates continue to weigh on the precious metal,” commented Fawad Razaqzada of City Index.
Jerome Powell, the chairman of the Fed, has already said that the institution intends to raise its rates further by the end of the year.
“Gold also appears to be losing its luster as a safe haven, failing to rise despite heightened fears of an impending recession,” Han Tan said.
Indeed, the metal seems unable to “take advantage of the risk aversion that persists in the markets”, abounds Fawad Razaqzada.
Around 4:15 p.m. GMT (6:15 p.m. in Paris), an ounce of gold cost 1,804.58 dollars, against 1,826.87 dollars seven days earlier at the end of trading.
leaded base metals
Industrial metals fell during the week on the London Metals Exchange, weighed down by concerns of a global recession threatening demand, in addition to better supplies of many base metals.
“The supply concerns that existed before have evaporated,” said Daniel Briesemann, analyst at Commerzbank, saying that industrial metals are heading for “heavy losses” for the second quarter.
“Recession concerns are spreading among investors, suggesting lower demand for the metals,” he said.
“At the same time, many metals markets have been better supplied over the past few months,” Briesemann continues.
Copper is “a good indicator of global economic health, because the ductility (being able to be deformed without breaking, editor’s note) and the conductivity of the metal mean that it is used in many industries around the world”, explains Russ Mould, analyst at AJ Bell.
Barometer of the economy, hence its nickname of Doctor Copper (Dr. Copper), it is therefore very sensitive to a potential slowdown in the world economy.
On Friday, copper slipped to $7,955.00 a tonne, below $8,000, for the first time since February 2021.
On the London Metal Exchange (LME), a tonne of copper for delivery in three months traded at 8,048.50 dollars around 4:15 p.m. GMT (6:15 p.m. in Paris), against 8,381.50 dollars the previous Friday at the close.
Cocoa cools
Cocoa prices were down this week, dragged down by weak demand.
On Friday, cocoa prices hit their lowest in New York for almost a year, at 2,304 dollars per tonne, and their lowest since March in London, at 1,742 pounds sterling per tonne.
Cocoa was down in London and New York “due to weak demand”, says Price Futures Group analyst Jack Scoville, but supply is doing well according to the analyst, as “good production in West Africa” and in Côte d’Ivoire is expected.
In London, a ton of cocoa for delivery in December was worth 1,751 pounds sterling around 4:15 p.m. GMT (6:15 p.m. in Paris), against 1,785 pounds sterling last Friday at the end of the session.
In New York, a ton for delivery in July was worth at the same time 2,312 dollars, against 2,432 dollars last Friday.
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