Investing.com — Gold Prices Drop Amid Risk-Off Sentiment

Gold prices fell in Asian trade on Thursday, facing minimal safe haven demand despite rising risk-off sentiment as traders focused on the Japanese yen’s significant appreciation.

A broader commodity market rout continued, with copper prices declining to a near four-month low due to ongoing concerns about leading importer China. Weak manufacturing activity readings from the U.S., Germany, and Japan have also negatively impacted copper’s outlook.

Spot gold decreased by 0.9% to $2,376.11 an ounce, while August gold futures dropped 1.7% to $2,375.40 an ounce by 00:52 ET (04:52 GMT).

Gold Prices Retreat Amid Safe Haven Plays and Rate Hike Bets Favoring Yen

Gold saw minimal safe haven demand even as global markets reeled from declining risk appetite, prompting traders to switch to the Japanese yen. The yen’s USDJPY pair fell to a two-month low on Thursday.

The yen gained from the unwinding of short positions over the past week, following suspected currency market intervention by Tokyo. Furthermore, speculation regarding a potential interest rate hike by the Bank of Japan next week benefitted the yen, particularly with recent data suggesting recovery in the Japanese economy.

Gold and metal markets did not capitalize on the dollar’s decline, which has weakened ahead of several key U.S. economic releases. GDP data for Q2 is expected later on Thursday, while the PCE price index data, the Federal Reserve’s preferred inflation measure, will be available on Friday.

Other precious metals also experienced declines, with platinum futures falling 1.1% to $949.60 an ounce, and silver futures sinking 4.2% to $28.098 an ounce, erasing much of their recent rally.

Copper Losses Deepen Amid Demand Jitters

In the industrial metals sector, copper prices continued to slide on Thursday under intensifying selling pressure amid fears of a slowdown in global demand.

Benchmark copper futures on the London Metal Exchange dropped 1.6% to $8,960.50 a tonne, breaching the $9,000 mark for the first time since early April. One-month copper futures fell 0.6% to $4.0540 a pound.

Both contracts are enduring significant losses lately due to growing worries over demand in leading importer China, following a series of disappointing economic indicators.

Weak manufacturing activity data from the U.S., Japan, and Germany has further heightened concerns about dwindling industrial activity.