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Title: Gold Hits 1-Month Low After Hawkish Powell, Copper Plummets

Aug 29, 2022 11:00PM ET

By: AnalysisWatch

Gold prices fell to a one-month low on Monday after hawkish signals from the US Federal Reserve, while copper prices fell on weak industrial data in China.

As of 10:20 p.m. EDT, spot gold prices were down 0.7 percent to $1,726.06 per ounce, while gold futures were down 0.7 percent to $1,727.50 per ounce. Both instruments were trading at their weakest levels since late July.

Last week, gold prices fell after Fed Chairman Jerome Powell dismissed any notion of a dovish Fed and warned that U.S. consumers and businesses will face higher interest rates as inflation rises. The Fed chairman also said that economic growth in the country was likely to slow as a result.

More than 60% of traders now expect the Fed to raise interest rates by 75 basis points—the upper end of forecasts—in September. Comments from several Fed officials suggest that US interest rates could end the year well above 3%, from the current 2.25-2.5%.

This week, attention turns to US payroll data due on Friday, which could give the Fed even more room to raise rates.

Rising interest rates have largely wiped out gold's gains this year, although the yellow metal has made some gains in the wake of the Russia-Ukraine conflict. Gold has fallen nearly 5% in the past year and is down nearly 20% from its 2022 high.

Industrial metals have also fallen as the strong dollar weighed and Powell's economic warning sowed doubts about demand for metals.

Copper futures tumbled 1.8% on Monday as weak industrial data from China deepened the red metal's losses. Industrial profits in the country continued to decline in July.

Focus now turns to China's PMI data due later this week, which is likely to further influence prices.

Copper prices have fallen significantly this year due to slowing economic growth in China, the largest importer of the yellow metal.

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