Copper Prices Rise on China Stimulus Hopes, While Gold Prices Remain Stable

As the stock market recovered on Wednesday, demand for safe-haven assets declined, while copper prices rose on the possibility of fresh stimulus measures in China, the largest importer in the world.

Spot gold prices were relatively stable at $1,775.35 per ounce at 20:18 ET (00:18 GMT), while gold futures prices remained unchanged at $1,787.70 per ounce.

The yellow metal was pushed down by Wall Street's gain as a run of positive earnings announcements from Walmart (NYSE:WMT) Inc and Home Depot (NYSE:HD) boosted market sentiment.

Despite recent inflationary pressures, the steady performance of retailers indicates that consumer spending, a vital engine of the U.S. economy, has remained resilient.

This increased risk-taking and decreased demand for safe assets such as gold. Expectations of an ongoing increase in U.S. interest rates, which have attracted speculators to the dollar, have also weighed on gold.

The price of gold is anticipated to decline for a third consecutive session and is down more than 2% year-to-date. Other precious metals also traded sideways on Wednesday. Platinum and silver futures fell 0.1% each.

Copper prices sustained Tuesday's solid rise as traders awaited fresh economic development-promoting stimulus measures from China.

Copper futures rose 0.2% to $3.6315 per pound, extending Tuesday's 0.7% increase, following China's announcement of plans to increase infrastructure spending and release additional cash.

Tuesday, Chinese officials declared that the government will accelerate infrastructure construction through the use of special bonds and increased credit guarantees. In addition, the government intends to aid its suffering real estate market by issuing additional loans.

In an effort to boost economic growth in the face of COVID-19 lockdowns, the People's Bank of China surprisingly reduced interest rates this week.

The United States is the world's largest importer of copper, and the possibility of rising economic activity signals a growth in copper demand.

This approach supported the prices of other industrial metals as well. Zinc grew by 2.1%, while nickel rose by 2.5%.