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02 December 2023

Gold slips from 12-week high as oil, copper tumble

Oil added to losses on Wednesday to trade near its lowest since 2009, while copper dropped to 5-1/2 year lows. (File)

By Reuters

Gold struggled on Wednesday to hold near a 12-week high as a rout in commodities such as oil and copper took a toll on the metal, offsetting safe-haven bids arising from global growth concerns.

Oil added to losses on Wednesday to trade near its lowest since 2009, while copper dropped to 5-1/2 year lows.

Spot gold fell 0.3 per cent to $1,227.50 an ounce by 0339 GMT (0739 UAE time), after marking a 12-week high of $1,243.60 on Tuesday.

“We are giving back some of the gains because of the overall unwinding of positions in commodities,” said a precious metals trader in Sydney, adding that gold also faced technical resistance at around $1,244.

“Gold might push higher, given equities have been volatile, but it will be hard work. In the short term, we might squeeze lower to $1,220 before we head back up.”

Asian equities dipped on worries over global economic growth. On Tuesday the World Bank lowered its global growth forecasts for 2015 and next year due to disappointing prospects in the euro zone, Japan and some major emerging economies.

Typically, lower equities and a slowdown in the global economy would have lifted the price of safe-haven gold, but bullion traders found it hard to ignore the sharp sell-offs in oil and copper on Wednesday.

Three-month copper on the London Metal Exchange tumbled as much as 8.7 per cent, while Shanghai copper fell 5 per cent, the maximum it is allowed to fall in one day, because of the global economic concerns and a wave of stop-loss orders.

Adding to the pressure on bullion was strength in the dollar, which makes gold more expensive for holders of other currencies and also dulls its appeal as a hedge.

The greenback scaled a nine-year peak against the euro on Wednesday as bolder stimulus from the European Central Bank seemed imminent.

In the physical bullion markets, buyers turned cautious after gold failed to hold on to the previous session's highs.

Premiums in top consumer China fell to around $3 an ounce over the global benchmark from $4-$5 in the previous session.

Among other precious metals, silver slipped 1 per cent after gaining nearly 3 per cent on Tuesday. Palladium and platinum also declined.