Gold prices dip below $2,300, copper weak on China woes

Investing.com-- Gold prices fell below key levels in Asian trade on Thursday, as traders remained biased towards the dollar and wary of metals before key inflation data that is likely to factor into interest rates.

Among industrial metals, copper prices were nursing losses this week amid worsening sentiment towards top importer China. 

Spot gold fell slightly to $2,298.86 an ounce, while gold futures expiring in August fell 0.2% to $2,309.35 an ounce by 23:55 ET (03:55 GMT). 

Strong dollar pressures gold, PCE data awaited 

Metal prices remained under pressure as the dollar rose to a near two-month high this week.

Flows into the dollar were driven chiefly by anticipation of PCE price index data, which is due on Friday. The reading is the Fed’s preferred inflation gauge, and is widely expected to factor into the central bank’s stance on interest rates. 

The PCE data is expected to show inflation cooled mildly in May, but remained above the Fed’s 2% annual target. 

Sticky inflation gives the Fed more headroom to keep interest rates high for longer- a scenario that bodes poorly for gold and precious metals. Hawkish comments from Fed officials also furthered expectations of high interest rates in recent sessions.

Higher rates push up the opportunity cost of investing in non-yielding assets such as gold, and see traders turn more biased towards the dollar and U.S. debt.

Other precious metals fell on Thursday, tracking this notion. Platinum futures fell 0.4% to $1,025.10 an ounce, while silver futures fell 0.5% to $29.117 an ounce. 

Copper weak as China data underwhelms 

Benchmark copper futures on the London Metal Exchange rose 0.4% to $9,573.0 a tonne, while one-month copper futures fell 0.1% to $3.3665 a pound.

Both contracts were nursing steep losses this week amid souring sentiment towards top importer China, which is involved in a trade dispute with the European Union over tariffs on Chinese electric vehicle imports.

Data on Thursday showed growth in China’s industrial profits stalled in May, also sparking concerns over slowing economic growth in the world’s biggest copper importer.