The price of copper, along with other industrial metals, experienced heavy selling pressure on Tuesday as concerns continue to mount over a decline in imports by China. Similarly, gold edged lower as safe-haven buyers preferred the greenback.
Early Asian trading sessions on Tuesday saw Copper futures tumble by 0.4% to trade at $3.858 per pound, extending sharp losses seen on Monday amid fears of slowing demand in China.
Meanwhile, global commodity markets declined further following poor industrial production data from China. The report is concerning as it shows a sluggish demand from China, which has hitherto been a heavyweight in the commodity market.
Even though Chinese industrial output ticked higher by 3.8% in July, it came below the expectations of 4.6%. Also, it is slightly lower than June’s reading which came in at 3.9%. The newly released industrial output data is coming on the heels of severe Covid-19 lockdown, which has crippled economic growth in the country.
Similarly, Chinese retail sales came in lower than anticipated. This doesn’t come as a surprise, though, especially with the People’s Bank of China’s recent unexpected rate cut. Despite the move expected to sustain the economy, realities show that it is putting extreme pressure on the economy.
Other industrial metals like Aluminum are also being pressured down. Aluminum prices slumped nearly 1.2% on Monday and kicked off Tuesday’s trading session with a further lower push. On the other side, nickel and zinc are also down by 4.6% and 0.4%, respectively.
Despite dwindling demand from China, BHP group, a major miner, says it expects Chinese demand for copper and other industrial metal to remain resilient. With expectations of increased demand, the BHP group is working assiduously to ramp up copper and iron ore production.
Gold in chaos
Meanwhile, gold prices have edged lower on Tuesday, with the precious metal seeing some steep losses due to dollar-inclined buyers.
Spot gold traded flat and saw minimal action. As of the time of writing this report, spot gold sold for $1,779.13 an ounce. Gold futures plummeted by 0.2% to trade at $1,794.1. While the dollar index rallied 0.7%, both metals shed nearly 1%.
The returns on gold have remained uninspiring for much of this year, thanks to rising inflation and volatility in the metal market. More so, continued U.S interest rate hikes have seen investors favor the greenback as a safe haven.