• Gold price loses momentum to around $2,650 in Monday’s early Asian session. 
• Weaker Chinese economic data undermine the Gold price. 
• The US PPI report and Middle East geopolitical risks could support the yellow metal. 

Gold price (XAU/USD) edges lower to $2,650, snapping the two-day winning streak during the early Asian session on Monday. The downbeat Chinese economic data and firmer Greenback weigh on the precious metal. Nonetheless, the prospects of further interest rate cuts this year and safe-haven demand might cap its downside. 

China’s deflation pressure increased in September. The Consumer Price Index (CPI) inflation unexpectedly eased in September, while the Producer Price Index (PPI) fell more than expected during the same period, highlighting the need for more stimulus measures. The persistent deflationary pressure in China is likely to exert some selling pressure on the yellow metal, as China is the world’s largest Gold consumer. 

The US Producer Price Index (PPI) was unchanged in September, indicating a still-favorable inflation outlook and supporting the bets of the Federal Reserve (Fed) rate cut in November. “The PPI numbers leaned friendly for the precious metals market bulls and suggest the Fed remains on track for two quarter-point interest rate cuts this year,” said Jim Wyckoff, senior market analyst at Kitco Metals.

Additionally, the rising geopolitical tensions in the Middle East have triggered the fear of wider war in the region, boosting the traditional safe-haven assets like the Gold price. On Sunday, at least four Israeli soldiers were killed and more than 60 people were injured by a drone attack in north-central Israel, per CNN. The number of injuries makes the attack one of the bloodiest on Israel since the war started last October. Hezbollah has claimed responsibility for the attack.

• Gold edged lower this week but managed to stabilize above $2,600.
• The technical outlook suggests that sellers remain reluctant to bet on a deeper correction.
• Investors will keep a close eye on macroeconomic data releases from China next week.

Gold (XAU/USD) declined sharply in the first half of the week but regained its traction after coming within a touching distance of $2,600. Investors will scrutinize macroeconomic data releases from China next week, while keeping a close eye on geopolitical developments.

Gold stages limited correction

Gold edged lower at the beginning of the week and closed in the red on Monday as the positive impact of the previous Friday’s upbeat September employment data continued to be felt on the USD. Meanwhile, although geopolitical tensions remain high, they haven’t escalated any further with Israel taking its time in mulling its retaliatory response to Iran. In turn, the broad-based USD strength caused XAU/USD to stay on the back foot.

The National Development & Reform Commission (NDRC), China’s state planner, said on Tuesday that the downward pressure on China’s economy is increasing, adding “China’s economy is facing more complex internal, external environments.” 

Growing concerns over an economic downturn in China, the world’s biggest consumer of Gold, caused the precious metal to continue to stretch lower. Reflecting this sentiment, China’s Shanghai Composite Index fell nearly 7%, and Hong Kong’s Hang Seng Index lost over 1% on Wednesday.

The hawkish tone in the minutes of the Federal Reserve’s (Fed) September policy meeting helped the US Dollar (USD) outperform its rivals late Wednesday, not allowing XAU/USD to stage a rebound. The publication showed that even though a substantial majority of Fed officials supported the 50-basis-point (bps) rate cut, there was even a broader consensus that this initial step would not lock the Fed into any specific pace for future rate cuts. Additionally, some participants favored only a 25 bps reduction in the policy rate cut, while “a few others” mentioned they could have supported that decision as well.

The US Bureau of Labor Statistics reported on Thursday that annual inflation in the US, as measured by the change in the Consumer Price Index (CPI), softened to 2.4% in September from 2.5% in August. The core CPI, which excludes volatile food and energy prices, rose 3.3% on a yearly basis, surpassing the market expectation of 3.2%. Finally, the CPI and the core CPI increased 0.2% and 0.3%, respectively, on a monthly basis. Other data from the US showed that the number of first-time applications for unemployment benefits climbed to 258,000 in the week ending October 5 from 225,000 in the previous week. The disappointing Initial Jobless Claims reading didn’t allow the USD to benefit from the inflation report and helped XAU/USD find its footing.

In the absence of fundamental drivers, Gold continued to stretch higher on Friday but struggled to gather bullish momentum. The final data of the week from the US showed that the Producer Price Index (PPI) rose 1.8% on a yearly basis in September, arriving above the market forecast of 1.6%.

Gold investors await key data releases from China

The US economic calendar will not feature any high-tier data releases in the first half of the week. On Thursday, the US Census Bureau will release Retail Sales data for September. The market reaction to this data could be straightforward, with a positive surprise supporting the USD and a negative reading having the opposite impact on the currency’s valuation. Nevertheless, this data by itself is unlikely to have a strong enough effect to alter Gold’s direction.

Meanwhile, market participants will pay close attention to macroeconomic data releases from China. In the Asian session on Monday, Trade Balance figures could set Gold’s tone at the beginning of the week. A sharp decline in the trade surplus could feed into concerns over China’s economic health and weigh on Gold. Early Friday, the third-quarter Gross Domestic Product (GDP), which is forecast to show an annualized growth of 4.6%, alongside the Industrial Production and Retail Sales data for September, will be scrutinized by investors. On a yearly basis, Industrial Production and Retail Sales are anticipated to rise by 4.6% and 2.4%, respectively. Again, disappointing data releases are likely to hurt Gold, while positive surprises could be supportive for the yellow metal.  

Investors will continue to assess geopolitical developments next week as well. If Israel carries on with a retaliatory attack against Iran, a deepening crisis in the Middle East could help Gold benefit from safe-haven demand.

Gold technical outlook

The Relative Strength Index (RSI) indicator on the daily chart rose toward 60 after falling to the neutral 50 area earlier in the week, suggesting that Gold’s bullish bias remains intact following a technical correction. 

On the upside, the midpoint of the ascending regression channel coming from June aligns as immediate resistance at $2,660 before $2,675 (static level) and $2,700-$2,710 (round level, upper limit of the ascending channel).

In case XAU/USD drops below $2,600-$2,590 (lower limit of the ascending channel, Fibonacci 23.6% retracement of the June-September uptrend) and starts using this level as resistance, technical sellers could take action. In this scenario, $2,545-$2,535 (50-day Simple Moving Average, Fibonacci 38.2% retracement) could be seen as the next bearish target.

• Silver price rises to near $31.50 after the release of the US PPI data for September.
• The annual headline and core PPI grew faster than expected.
• The Fed is expected to cut interest rates again in November.

Silver price (XAG/USD) climbs to near $31.50 in Friday’s New York session. The white metal gains while the US Dollar (USD) remains steady after the release of the United States (US) Producer Price Index (PPI) data for September.

The US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, wobbles around 103.00.

The PPI report showed that the annual headline producer inflation grew by 1.8%, faster than estimates of 1.6%. However, it remained slower than 1.9% in August, upwardly revised from 1.7%. The annual core PPI – which excludes volatile food and energy prices – accelerated at a faster-than-expected pace to 2.8% from expectations of 2.7% and the former release of 2.6%, upwardly revised from 2.4%.

Meanwhile, the month-on-month headline producer inflation remained flat, strengthening the case for further interest rate cuts by the Federal Reserve (Fed). According to the CME FedWatch tool, 30-day Federal Fund Futures pricing data shows that the central bank will cut its borrowing rates by 25 basis points (bps) to 4.50%-4.75% in November.

The Fed started the policy-easing cycle with a 50-bps interest rate cut in September as Fed officials were concerned over growing job market risks, with confidence that price pressures will sustainably return to the bank’s target of 2%.

Silver technical analysis

Silver price strengthens after breaking above the horizontal resistance plotted from the September 30 low of $31.30, which is expected to act as support ahead. The near-term outlook of the Silver price has become upbeat as it has climbed above the 20-period Exponential Moving Average (EMA), which trades around $31.50. The asset is expected to extend its upside toward an October high of around $33.00.

The 14-period Relative Strength Index (RSI) climbs to near 60.00. A bullish momentum would trigger if the RSI breaks above 60.00.

Silver four-hour chart

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Copper is one of the most versatile and essential metals in today’s world. With applications ranging from electrical wiring to renewable energy infrastructure, its demand remains robust. But what does the future hold for copper prices?

We will draw on insights from our in-house experts (Boris Mikanikrezai and Andrew Cole) when exploring the current global picture. We will provide a copper price forecast for 2024 and a long-term outlook for 2025.

Global copper market outlook

As we navigate through 2024, the copper market presents a complex global picture, influenced by varying economic climates in major regions such as the US, China and Europe.

In the United States, the price of copper remains stable yet subdued, largely due to the seasonal summer lull, with premiums holding steady in the Midwest. Despite challenges, long-term optimism prevails, buoyed by potential supply imbalances and increasing demand for copper in green energy projects.

China, a major player in the copper market, witnessed a mild recovery in its physical market during August 2024. The copper grade A cathode premium in Shanghai saw an uptick, reflecting improved market conditions. This recovery is driven by expectations for better import arbitrage conditions post-LME price decline, although challenges remain due to fluctuating prices.

In Europe, the copper market remains weak, particularly in Germany – Europe’s largest consumer. Despite some demand from green energy projects, overall market conditions are bearish, with ample stock levels and sluggish performance in the manufacturing, automotive and construction sectors.

For more information on our long-term price analysis of the global copper market, see Fastmarkets’ copper 10-year long-term forecast.

Short-term copper price forecast for the remainder of 2024

In Q4 2024, copper prices are expected to experience upward pressure, driven by a more favorable macroeconomic sentiment (Federal Reserve rate cuts, stimulus in China), tighter market fundamentals (on expectations for smelter production cuts, a recovery in physical demand in China), positive seasonality (the fourth quarter typically being the strongest) and speculative positioning (rapid rebuilding of long positions). Given these factors, Fastmarkets analysts view the risk-reward profile skewed to the upside for the fourth quarter.

In China, the Shanghai premium should continue its recovery in the final quarter of the year, largely due to the improved sentiment following the substantial stimulus measures implemented by the country’s authorities.

In the US, spot market activity is projected to remain stable until the year-end, although supply availability could become a little tighter. Meanwhile, Europe might also see quiet spot activity until the remainder of the year, as most consumers are adequately covered by long-term contracts.

Improved macroeconomic conditions

China’s stimulus package, announced in September, represents a significant injection of liquidity totaling 3.95 trillion yuan ($560 billion), equivalent to over 3% of China’s GDP. The size of this package is substantial, nearing the level of support provided during the Covid-19 crisis. Alongside the Federal Reserve’s recent rate cuts, this should increase liquidity in the financial system in the coming months. Speculators have already begun to re-engage on the long side of the copper market in response. Given that the fourth quarter is historically the strongest for copper, we expect prices to average around $10,265 per tonne in Q4 2024, which would mark a record high.

Short-term challenges

Lower trading volumes and potential market volatility suggest caution. Despite the expected rise, the market remains sensitive to macroeconomic conditions and geopolitical events. Investors should keep an eye on these factors as they could impact short-term price movements.

The video below shows the relationship between global refined copper supply and demand, from 2022 through 2025.

Long-term copper price forecast for 2025 and beyond

Beyond the immediate future, the copper market and the price of copper is poised for a bullish long-term trajectory, driven by the energy transition’s escalating demand. For instance, by 2025 the copper grade A cathode premium in Rotterdam is projected to rise by approximately 25%, reflecting tighter regional fundamentals and a recovering European market.

Fastmarkets’ copper long-term outlook remains optimistic. As we move toward 2034, refined copper consumption is set to be driven significantly by sectors linked to the energy transition, including electric vehicles and renewable energy applications. The anticipated structural supply deficit will likely necessitate increased investments in production facilities, further underpinning a bullish outlook for copper prices.

Key drivers of copper demand and projected growth rates

As mentioned, refined copper consumption will be supported by demand from sectors linked to the energy transition. Some of its uses are listed below:

∙ To help connect batteries to electric vehicle (EV) powertrains
∙ For use in electric motors in the EV charging infrastructure
∙ Solar energy and wind power applications
∙ Grid connections

We expect total apparent demand for copper to rise at a compound annual growth rate (CAGR) of 2.6% in the decade to 2034. Copper consumption from energy transition sectors should grow at a CAGR of 10.7%, including 14.3% for the EV sector, 5.6% for the solar power industry and 9.3% in wind power applications. Traditional non-energy transition sectors should see a growth rate of 1.4%.

Regional copper price projections for 2025

The US copper market is expected to see a modest increase in demand, driven by government infrastructure projects and a growing emphasis on renewable energy. The supply-demand balance is likely to tighten, supporting higher copper prices.

China remains a critical player in the global copper market. The country’s focus on green energy and electric vehicles will drive significant demand. We project the Shanghai premium will average approximately $27 per tonne in 2025, reflecting a 25% decline from the estimated 2024 average. However, the long-term outlook remains positive, with expected stabilization and growth.

Key takeaways regarding copper price forecasts

The forecast for copper prices in the next 12 months is bullish. However, there are key risks to monitor, including a potential US economic recession and increased trade protectionism. The long-term forecast is also very constructive, driven by robust demand from the energy transition sectors and constrained supply dynamics.

Economists, analysts and investors should keep an eye on macroeconomic conditions, geopolitical events and industry-specific developments that could impact copper prices.

For more detailed insights and a comprehensive analysis, consider exploring Fastmarkets’ copper 10-year long-term forecast.