Investing.com -- Gold prices kept to a tight trading range on Wednesday as markets awaited some progress in negotiations over raising the U.S. debt ceiling, while copper prices hit six-month lows on signs of a slowdown in global manufacturing activity.
Focus was also chiefly on the minutes of the Federal Reserve’s May meeting, due later in the day, for more cues on the path of U.S. interest rates this year.
Gold has moved in a tight trading band of $1,950-$1,980 an ounce for nearly a week after losing the key $2,000 level, amid continued uncertainty over a U.S. debt default.
Consistent negotiations between Democrat and Republican lawmakers have so far failed to yield a deal to raise the U.S. spending limit and avoid a default. This comes ahead of a June deadline for a default, which could have dire consequences for the global economy.
But the yellow metal still saw some safe haven bids as traders positioned for a slowdown in global economic activity this year. A raft of weaker-than-expected purchasing managers index readings released on Tuesday furthered this notion, battering industrial metals.
Copper prices sank to a near six-month low after preliminary manufacturing PMI readings from the U.S. , euro zone , and the UK contracted more than expected in May. The readings indicated a consistent slowdown in global manufacturing activity this year, which is expected to significantly dent copper demand.
The red metal was already nursing steep losses for May after recent data showed an unexpected slowdown in Chinese manufacturing activity . China is the world’s largest copper importer, and is struggling to shore up economic growth as it reemerges from three years of COVID lockdowns.
Copper futures rose 0.2% to $3.6452 a pound on Wednesday, hovering around their lowest levels since late-November.
Broader metal markets were also pressured by a resurgence in the U.S. dollar , as traders bet that the Federal Reserve will keep interest rates higher for longer this year.
While the central bank has signaled a potential pause in its rate hike cycle, it is also expected to keep rates at near 15-year highs for the remainder of the year, as inflation remains sticky.
Higher interest rates pressure metal prices by increasing the opportunity cost of holding non-yielding assets. This trend had battered metal prices through 2022, and is expected to keep the pressure on this year.
Add Chart to Comment
We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:
- Enrich the conversation
- Stay focused and on track. Only post material that’s relevant to the topic being discussed.
- Be respectful. Even negative opinions can be framed positively and diplomatically.
- Use standard writing style. Include punctuation and upper and lower cases.
- NOTE: Spam and/or promotional messages and links within a comment will be removed
- Avoid profanity, slander or personal attacks directed at an author or another user.
- Don’t Monopolize the Conversation. We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
- Only English comments will be allowed.
Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.