Gold prices posted slight gains on Monday, extending the momentum from the previous session, as mixed U.S. labor data solidified expectations that the Federal Reserve would maintain its current interest rates. This sentiment weighed on the U.S. dollar and Treasury yields, contributing to the precious metal’s rise on the prospect of reduced increases in its opportunity cost.
Gold Prices:
Spot gold increased by 0.2% to reach $1,944.80 per ounce.
Gold futures set to expire in December rose by 0.2%, reaching $1,970.95 an ounce by 00:23 ET (04:23 GMT).
The recent surge in gold prices can be attributed to the belief that the Federal Reserve, considering the mixed U.S. economic indicators, is likely to have limited room for further interest rate hikes. Although nonfarm payrolls showed an increase in August, the unemployment rate also rose. Consequently, there is near-unanimous expectation that the central bank will maintain steady rates in its September meeting and may even announce the conclusion of its current rate hike cycle.
However, while it appears that U.S. interest rates may not rise further, they are expected to remain at over 20-year highs for an extended period, as U.S. inflation levels continue to persist. This scenario presents some limitations to gold’s upside potential, as higher interest rates raise the opportunity cost of holding the precious metal.
Market participants are now closely watching a series of Fed speakers scheduled for this week, eagerly seeking additional insights into monetary policy and more indicators regarding the world’s largest economy.
Copper Prices:
Copper prices experienced an upswing on Monday, nearing a one-month high, fueled by growing optimism surrounding the economic recovery in China, a major copper importer.
Copper futures registered a 0.3% increase, reaching $3.8628 per pound.
The copper market is abuzz with anticipation of further stimulus measures from Beijing, particularly those aimed at China’s property market, as the government takes steps to support its slowing economic recovery. Notably, Chinese banks have started reducing yuan deposit rates, and the People’s Bank of China has relaxed some mortgage requirements. This positive sentiment toward the property market was also bolstered by a deal struck between beleaguered developer Country Garden Holdings and debtholders, which entails the postponement of certain payments.
As the week unfolds, market attention will remain fixed on Chinese trade and inflation data, providing valuable insights into the world’s largest copper importer. These indicators will help shape expectations and decisions within the copper market.
Overall, the precious metals and industrial metals markets are closely monitoring economic developments, central bank actions, and government policies as they navigate the path ahead, while the impact of the U.S. market holiday on trading is also taken into consideration.
