Gold Up: Covid -19 Affect
In Asia on Wednesday morning, gold was up. Following the latest Covid-19 outbreaks, investors raced to safe-haven yellow gold as their risk appetite declined. By 12:30 a.m. ET, gold futures had risen 0.19 percent to $1,791.15. (4:30 AM GMT).
The elephant in the room is this Covid-19 Delta variant and whether or not it has a meaningful impact on global recovery. According to Jeffrey Halley, senior market analyst for the Asia Pacific at OANDA, gold is expected to attract additional haven purchasing in this situation.
In the Asia Pacific, the Reserve Bank of New Zealand kept its interest rate at 0.25 percent. This was when it announced its policy decision earlier in the day. The country was put on lockdown after the country’s first local Covid-19 outbreak in six months. This put the brakes on the central bank’s plan to hike interest rates.
The Fate of Gold
In other central bank news, the Federal Reserve of the United States will issue the minutes of its July meeting later in the day. In the minutes, investors will be looking for clues about the Fed’s plans for asset cutting and interest rate hikes.
The fate of gold will be determined by the Fed minutes and indicate imminent asset tapering in September. Halley concluded that if this results in a stronger dollar and higher US yields, gold will likely go down below $1,700.
On Tuesday, Minneapolis Fed President Neel Kashkari stated that it might be “reasonable” to begin asset tapering later in 2021. This depends on the strength of the labor market recovery. On the same day, Fed Chairman Jerome Powell stated that it is unclear if the recent Covid-19 Delta variant breakouts will significantly impact the economy.
Copper Edges Up
Concerns about a supply disruption at Peru’s Las Bambas mine and ongoing labor strikes in top producer Chile drove up copper prices on Wednesday.
On the London Metal Exchange, three-month copper was up 0.8 percent to $9,325 per tonne. This erased losses from the previous session. The Shanghai Futures Exchange’s most-traded September copper contract slid 1.1 percent to 69,020 yuan ($10,650.08) a tonne. In fact, it mirrored overnight losses in London.
After a two-week truce, residents in the Peruvian Andes near MMG Ltd’s Las Bambas copper mine have blocked a road used to transport the metal, community officials said on Tuesday. Earlier this month, the Chilean mine Andina was working at a reduced capacity owing to a labor strike. In contrast, workers at another Chilean mine, Minera Lumina Copper, also went on strike.
