In Asian trade on Wednesday, gold prices showed minimal movement, holding steady after a notable retreat from record highs earlier in the week. Traders are now eagerly awaiting signals from the Federal Reserve regarding the potential trimming of interest rates.
The optimism surrounding a cooling labor market received a boost from a softer-than-expected JOLTs job openings reading for October. However, market attention remains fixated on the upcoming nonfarm payrolls report for November, scheduled for release this Friday.
Commencing the week at an impressive $2,100 per ounce, gold reached record highs, fueled by seemingly less hawkish comments from Fed Chair Jerome Powell and increased safe-haven demand amid heightened tensions in the Middle East. Despite a subsequent sharp pullback from these historic peaks, gold prices continue to hover comfortably above the $2,000 per ounce mark.
As of 00:08 ET (05:08 GMT), spot gold experienced a marginal 0.1% uptick to $2,021.61 per ounce, while gold futures expiring in February rose by 0.1% to $2,039.00 per ounce.
Uncertainty clouds Fed rate cut expectations, with traders indicating a greater than 50% chance of rate trimming by March 2024, according to Fed Funds futures prices. Meanwhile, there is over a 90% probability that the Fed will maintain rates during December. Despite market speculation, the central bank has given no clear signal on the timing of rate adjustments, asserting that rates will generally stay elevated unless significant inflation declines occur. The robust U.S. economy, marked by strong consumer spending in Q3, further contributes to the uncertainty surrounding the Fed’s plans.
While the prospect of higher interest rates poses a potential obstacle to gold gains, global economic concerns, particularly in China and the euro zone, may redirect some safe-haven flows toward the precious metal.
In a separate market development, copper prices rebounded on Wednesday after a two-day decline triggered by heightened worries about China, the top importer of the industrial metal. Copper futures expiring in March showed a 0.6% increase, reaching $3.8068 per ounce, following a nearly 4% loss in the previous two sessions.
This week, apprehensions about China escalated after Moody’s ratings agency suggested a potential credit rating downgrade, citing increased risks associated with a property market downturn and a lack of clear policy support from Beijing. Coupled with ongoing signs of economic weakness in China, these concerns amplified worries about a potential decline in copper demand in 2024.
