Copper Decreases Due to COVID Unrest in China, While Gold Decreases

Copper prices fell significantly on Monday as a result of rising social discontent in China over more COVID-19 lockdowns, while gold prices dipped as investors awaited fresh hints of U.S. monetary policy from this week's big economic statistics.

Copper futures expiring in March declined 1.3% to $3.5835 a pound by 18:50 ET (23:50 GMT) on Tuesday as traders predicted further demand destruction in China.

China is seeing a wave of civil disobedience in reaction to its strict zero-COVID policy, with protests and police clashes in a number of major cities as popular discontent with lockdown measures increases.

In the last three years, the zero-COVID policy has resulted in a number of lockdown measures that have severely impeded business activity and the mobility of individuals.

This also lowered China's appetite for imports of raw materials, resulting in a decline in copper prices in expectation of a decline in demand. The country's potential for violent demonstrations is a new hindrance to economic progress.

Copper prices are down more than 20% so far this year, as the global economy has slowed owing to rising inflation and interest rates, and as a result, metal demand has declined.

The markets largely overlooked signs of a declining copper supply, as major copper producers in Chile and Peru lowered output.

In anticipation of this week's lectures by numerous Federal Reserve speakers, including Chairman Jerome Powell, gold prices decreased modestly as the dollar strengthened.

However, Friday will be overshadowed by crucial nonfarm payroll data from the United States. Due to the continued strength of the labor market, the Fed has ample room to continue raising interest rates, which is bad for metal markets.

Gold on the spot market fell 0.2% to $1,752.08, while gold futures fell 0.2% to $1,181.85. As the December contract expiry date approaches, gold prices saw a minor backwardation, where spot prices were higher than futures prices.

In reaction to Federal Reserve suggestions that it will raise interest rates at a slower rate in the coming months, the price of gold has increased dramatically during the previous two weeks.

Notwithstanding, uncertainty about where U.S. interest rates may peak led some profit-taking in bullion prices, especially as U.S. inflation continued to move well over the Fed's objective.