Copper and Gold up Ahead of Ukraine War
Copper prices rose on Thursday, anticipating that China will increase metal-intensive infrastructure building to offset the impact of COVID-19 lockdowns, though stronger dollar restricted gains. On Thursday, Beijing closed specific public venues. It increased security at others as most of the city’s 22 million citizens participated in more COVID-19 mass testing to avoid a Shanghai-style lockdown. On Thursday, the dollar hit two-decade highs as Europe’s energy crisis hampered the euro.
At the same time, predictions damaged the yen that the Bank of Japan would maintain its ultra-easy policies.
A rising dollar raises the cost of greenback-denominated metals for buyers using other currencies.
Peruvian police announced on Wednesday that they had evicted an indigenous population that had set up camp within a massive open-pit owned by MMG Ltd’s (1208) Las Bambas copper mine; forcing the Chinese-controlled firm to cease operations.
The United States’ trade deficit in goods extended to a record high in March.
The deficit was most likely due to businesses being concerned about shortages of front-loaded imports following the Ukraine conflict; it boosted the likelihood of economic growth slowing in the first quarter.
Strong demand for gold-based exchange-traded funds (ETFs) contributed to overall gold demand reaching 1,234 tonnes in the first three months of 2022; the highest level since the fourth quarter of 2018.
The amount for the first quarter was also higher than the five-year average of 1,039 tonnes.
Spot gold prices (XAU=) rose to $2,069.89 per ounce last month, just shy of a record high set in 2020, as investors worried about the Russia-Ukraine crisis and rising inflation.
Gold closed the first quarter 6% higher; however, it fell to a two-month low on Wednesday as the dollar rose on aggressive monetary policy tightening prospects in the United States.
Central banks added 84 tonnes to official gold reserves; a 29 percent decrease from the same period last year but more than double the preceding quarter.
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