A group of mining stocks are expected to continue rising, as the weaker U.S. dollar lifts gold prices and Chinese manufacturing data boosts copper prices.
Fresnillo, the world’s largest producer of silver and Mexico’s largest gold miner, led the surge on Tuesday, jumping more than 6%, while gold miner Polymetal rose 1.7%, Barron’s reported. Commodities trader and miner Glencore climbed 2%, largely benefiting from higher copper prices. Miner Centamin, up 67% this year, also continues to rise.
Better-than-expected manufacturing data in China drove the copper price rise, which also helped major copper producers Anglo American, Antofagasta and BHP make gains of more than 1%, Barron’s said.
“The red metal is typically seen as a good barometer for the perceived health of the global economy, so the price action in copper suggests that dealers are optimistic,” CMC Markets analyst David Madden said.
Meanwhile, gold prices jumped more than 1% on Tuesday to a near two-week high, following the steepest fall in the dollar in more than two years as investors bet on U.S. interest rates staying lower for longer, Reuters said.
Spot gold was up 1% to $1,989.78 per ounce, having earlier hit its highest since Aug. 19 at $1,991.91. U.S. gold futures also rose nearly 1% to $1,997.30.
"The two drivers for gold are the weaker dollar and lower yields and that will keep the metal moving between the range of $1,800 and $2,100 until the U.S. presidential elections in November," said Robin Bhar, an independent analyst. "However, at the end of every month we might see some corrections as a result of speculators selling their positions."
The U.S. Federal Reserve's new monetary policy plan, which may lead to inflation rising marginally and long-term interest rates staying lower, also weighed on U.S. Treasury yields.
Low interest rates minimize the opportunity cost of owning non-yielding bullion, which is often used as a buffer against inflation and currency depreciation. Gold has gained about 31% this year, also supported by economic uncertainty stemming from the coronavirus pandemic.
While waning consumer demand remains a headwind, "strong investor demand is likely to continue to provide support for gold," Heraeus Precious Metals said in a note. "In the near term, gold could move sideways as it consolidates following its rapid rally to record highs in early August."
Copper prices scaled two-year highs on Tuesday as robust data on manufacturing activity in top consumer China, a weaker dollar and falling inventories boosted sentiment and expectations of strong demand for industrial metals, Reuters reported.
Benchmark copper on the London Metal Exchange was up 1.5% at $6,768 a tonne in official rings. Prices of the metal used widely in the power and construction industries earlier touched $6,830 a tonne, the highest since June 2018 and a gain of 56% since the middle of March.
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