Metals market today: Gold dips below $1,650, copper plunges almost 4% as dollar firms
10:48, 23 September 2022
Precious metals were distinctly gloomy on Friday morning, ending the week on a low note with gold, silver, platinum and palladium all down, following the US Federal Reserve announcing another 75-basis points rate hike at its September meeting recently, as anticipated. This is the third consecutive rate hike of this scale, with the Fed also having hinted at several other large increases in the coming months.
Not only that, but the Bank of England (BoE) has also recently hiked interest rates by 50 basis points. The European Central Bank has also highlighted that it is likely to raise interest rates to a level which might constrain economic growth for the near future.
Gold inched down 1.5% to $1,645 per troy ounce, with a weekly decline of about 1.7%, pressured further by the US dollar (DXY) hovering near 20-year highs.
Gold was further pressured by the US Fed's September 75-basis points hike
Analyst views on precious metals
According to Piero Cingari, analyst at Capital.com, “We have not yet reached a tipping point for the gold's bearish trend to reverse, but some rays of hope are appearing on the horizon.The Fed has reduced its growth forecast to 1.2% in 2023 (from 1.7% in June), raised the unemployment rate to 4.4% in 2023, and expects interest rates to peak at 4.6% next year.
As explained here, a hard landing of the economy with a sharp decline in growth, an increase in unemployment, and a decline in inflation is one of gold’s favourite economic scenarios, as it tends to outperform the stock market."
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Metals price performance
Silver dropped 3% to $19 per troy ounce, following gold’s footsteps, with a weekly decline of about 2.7%, also being pressurised by increasingly aggressive interest rate hikes by the major central banks.
Platinum dipped 1.8% to $880 per troy ounce, following reports of jewellery demand dipping in major consumer China due to extended lockdowns and fewer marriage registeries. Palladium plunged 3% to $2,100 per troy ounce.
Copper lost 4.1% to $3.3 per pound, with a weekly decline of about 5.9%, following a worsening energy crisis in Europe triggering an economic slowdown as evidenced by latest PMIs. Iron ore inched up from CNY 709 per tonne in the previous session to CNY 714 per tonne in the current session. Aluminium also edged down 1.8% to $2,189 per tonne.
The US dollar (DXY) inched up from 111.8 in the previous trading session to 112.3 in the current session, close to a 20-year peak.
The US 10-year Treasury yields rose to 3.8%, up by 7 basis points on the day. US 2-year yields soared to 4.24% up by 11 basis points on the day.
Top mining ETFs and mining stocks
The S&P Global Metals and Mining ETF (XME) fell about 4.5% this week
The Van Eck Gold Miners ETF (GDX) fell 0.4% to $23.7, with a weekly drop of about 2.3%.
The Van Eck Junior Gold Miners ETF (GDXJ) dipped 1.1% to $28.8, with a weekly fall of about 3.4%.
The S&P Global Metals and Mining ETF (XME) dropped 1.7% to $43.9, with a weekly decline of about 4.5%.
Glencore (GLEN) dropped 3.9% to GBP 4.7, with a weekly drop of about 6.6%.
Rio Tinto (RIOgb) inched up 1.7% to AUD 93.0, with a weekly fall of about 1%.
Anglo American (AALI) dropped 4.6% to GBP 27.0, with a weekly loss of about 5.2%.
Antofagasta (ANTO) inched lower 4.6% to GBP 10.5, with a weekly decline of about 8.4%.
Today’s market moving events
The S&P Global Composite PMI for UK was released today, coming in higher at 48.5 for September, up from 47.3 in the previous month.
The S&P Global Composite PMI for September for the Euro Area was also released, inching down from 48.9 in the previous month to about 48.2 this month.
Investors were looking forward to the S&P Global Composite PMI for the US, for this month, due to be released later in the day.
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