Gold plumbed its lowest since 2020 while copper and iron ore slumped, as the dollar’s rally to a fresh record added to fears for the global economic outlook.
The greenback surged in a tumultuous start to the week that also saw Britain’s pound hit a record low and China’s currency neared its weakest since 2008. Investors are turning to US currency as a haven -- rather than gold -- as monetary tightening clouds growth prospects.
“Recessionary concerns are gripping the market, with the fact that the US dollar is scaling higher and likely to continue to rise,” said Jessica Amir, a strategist at Saxo Capital Markets in Sydney. Gold and copper fell more than 1%, while iron ore futures extended a two-week decline.
While gold is a traditional haven in times of economic distress, the precious metal has slumped over the past month in the face of the greenback’s relentless gains and hawkish moves by central banks. Bullion has entered a bear market, trading at a level 20% below its record high in 2020.
Copper, often seen as a bellwether of global growth, just hit its lowest since July as investors bet on sharp slowdowns in the US, and more demand turbulence in Europe amid the region’s energy crisis. The weak yuan also adds to a burgeoning list of demand headwinds for China. Iron ore has sunk about 20% this quarter as investors continue to fret about a prolonged property crisis that’s stymied construction activity.
