The gold price was flat on Thursday but is on track for the worst performance in a week since 2021.
The Federal Reserve’s dovish signal and the hot US inflation have cast doubt over any further rate reductions in December.
Copper prices, among industrial metals were up on Friday but headed to a steep loss for the week due to a stronger dollar and worries about China’s poor demand.
Commerzbank AG predicts that metal prices will continue to drop if the Dollar Index continues to increase.
The dollar is stronger, and therefore the price of commodities in dollars will be higher for buyers from abroad.
The price of gold has dropped sharply
The gold price on COMEX has fallen by about 4.5% this week. The precious metals’ worst week was June 2021.
Since the US 2024 presidential election resulted last week, the yellow metal has fallen since its record highs as the dollar surged.
Bloomberg reports that the price drop has coincided with a significant withdrawal of gold from ETFs. The total amount is almost 22 tonnes since the start of the month.
Also, this week the US Consumer Price Index for October was high.
Fed chair Jerome Powell stated at an event in Dallas on Thursday that the US central banks had to take care with any further rate increases. The economy and labour markets were strong.
CME FedWatch shows that traders have priced in the probability of the Fed reducing rates by 25 basis point at their December meeting.
Silver market undersupply
Silver Institute’s most recent report indicates that demand will increase by 1 percent to 1,21 billion ounces. This is the second highest level recorded since records began.
The electrical and electronics applications are expected to drive a 7% increase in industrial demand to record levels.
Jewellery and silverware are expected to see increases as well.
Contrary to this, the physical investment demand will fall 15% and reach a new four-year low.
Silver supply, however, is only expected to rise by 2%, to 1,03 billion ounces. This will be less than expected demand.
The silver market will likely show an supply deficit this year for the fourth consecutive year. At 182 millions of ounces, it is again expected to be significant.
Silver prices were still under pressure on COMEX this week, with the price of an ounce falling to below $30 for the first day in over two months on Thursday.
The metals market could remain subdued
The copper price rose last Friday, after a week of steep declines. Experts, however, see this as a temporary price increase.
Commerzbank predicts that metal prices will continue to drop if the dollar’s upward trend continues.
The copper price has fallen by nearly 3% this week, as the dollar is strong.
The price of red metal was also affected by the mixed economic statistics from China, its largest consumer.
National Bureau of Statistics data showed that the industrial production grew less than anticipated in October. Retail sales increased more than anticipated during Golden Week.
Volkmar Baur is an FX analyst with Commerzbank. He said that in a recent report, “There are many voices criticizing the lack of copper concentrate which slows down production.”
The German Bank estimates that the supply deficit could be as high as 1,000,000 tons in the next year.
The three-month contract for copper on the London Metal Exchange is now $9,168 per tonne, an increase of 1.5% over the previous closing price.
The post Gold sets for worst week in 2021; Copper market braces itself for further losses can be updated as new information unfolds
