Gold prices remained relatively unchanged in Asian trade on Thursday, maintaining a range between $2,000 and $2,050 an ounce established over the past week. Market speculation regarding the timing of potential interest rate cuts by the Federal Reserve contributed to the yellow metal’s trading dynamics.
While dovish signals from the Fed initially propelled gold above the $2,000 an ounce level, it struggled to achieve further gains as risk appetite improved and traders began to reconsider expectations for early rate cuts. The recovery of the dollar from near five-month lows this week, spurred by comments from several Fed officials cautioning against overly optimistic bets on an early rate cut, also capped significant advances in gold prices.
Spot gold recorded a 0.3% increase, reaching $2,036.89 an ounce, while gold futures expiring in February remained flat at $2,048.65 an ounce.
Despite the pushback from Fed officials, Fed Fund futures prices indicated that traders were pricing in a 70% chance of a 25 basis point rate cut in March 2024. Economic readings scheduled for the week, including a revised reading on third-quarter GDP, weekly jobless claims data, and the PCE price index (the Fed’s preferred inflation gauge), are expected to influence market sentiment. The strength of the U.S. economy provides the Fed with flexibility to maintain higher rates for a more extended period.
In the context of industrial metals, copper prices hovered around a four-month high, driven by dollar weakness and expectations of additional stimulus measures in China. Copper futures expiring in March stabilized at $3.9078 a pound, closely aligning with highs last observed in early August.
China’s central bank’s decision to maintain its benchmark loan prime rate at record lows contributed to loose monetary conditions, supporting copper prices. Despite economic challenges, copper demand in China has remained robust, and further stimulus measures are anticipated to bolster the metal’s prospects. Additionally, copper markets are expected to tighten in 2024 due to increasing demand and major mine closures in Panama and Peru limiting supplies.
