Gold Slips Lower; Central Bank Buying Set to Boost Demand
Gold Prices Drift Down
Gold prices slipped a little on Wednesday, staying within tight trading ranges. The Juneteenth holiday in the U.S. limited the market activity.
At 07:30 ET (11:30 GMT), gold dropped 0.1% to $2,328.84 an ounce, while another form of gold dropped 0.2% to $2,343.20 an ounce.
Boost from Central Bank Buying
Recently, both gold and broader metal prices have fallen. This is partly due to the Federal Reserve announcing fewer interest rate cuts in 2024. Fewer cuts have strengthened the dollar, making gold more expensive for international buyers and increasing the cost of investing in non-yielding assets.
Despite the dip, gold had a good run earlier in the year and reached almost $2,450 an ounce in May. This was driven by strong demand from central banks, due to concerns about geopolitical instability and inflation. Last year, central banks bought the second-highest amount of gold ever, at 1,037 tons, and in 2022, they bought a record 1,082 tons.
According to the World Gold Council's annual survey, which asked 70 central bankers, 29% plan to increase their gold reserves over the next year, the highest level since 2018.
Other Precious Metals
Other precious metals also had a quiet trading day on Wednesday. Platinum rose 0.8% to $984.75 an ounce, and silver rose 0.1% to $29.598 an ounce.
Copper Bounces Back
Among industrial metals, copper prices rose on Wednesday. This was a slight rebound after reaching its lowest level in two months earlier in the week. The benchmark on the London Metal Exchange rose 1.3% to $9,800.30 a tonne, and one-month copper futures rose 1.4% to $4.5550 a pound.
The recent decrease in copper's price followed disappointing industrial output data from China, the largest consumer of copper, especially as their housing and construction sectors are struggling. Although copper’s price hit a record high above $11,000 a tonne in May, it has since cooled due to worries about increasing global inventory levels and weakness in China.