Gold prices remained relatively stable in Asian trading on Tuesday, recovering slightly after experiencing a decline from record highs. This adjustment comes as traders recalibrate their expectations regarding potential interest rate cuts by the Federal Reserve.
In contrast, industrial metals faced challenges, particularly copper, which saw a significant drop as Chinese markets reopened following a week-long holiday. Market reactions were muted regarding Beijing’s newly announced stimulus measures, which failed to excite investors.
This week, market participants are keenly awaiting further guidance from the Federal Reserve, as well as important inflation data that could influence future rate decisions. In September, gold prices surged to all-time highs after the Fed implemented a 50 basis point rate cut and initiated an easing cycle. However, uncertainty surrounding the Fed’s future approach to rate cuts has caused the yellow metal to retract from these peaks.
Additionally, the strengthening U.S. dollar, which recently reached a seven-week high, has contributed to pressure on the metal markets.
As of now, spot gold is priced at $2,642.86 per ounce, while December gold futures have dipped by 0.2% to $2,661.70 per ounce.
Traders attribute much of gold’s recent decline to robust nonfarm payrolls data released last Friday, which led to a significant reduction in expectations for future rate cuts. Current projections indicate an approximately 81% likelihood of a 25 basis point cut in November, with a 19% chance of rates remaining unchanged, according to CME FedWatch.
Attention this week is also on the minutes from the Federal Reserve’s September meeting, which may provide further insights into its data-driven strategy regarding rate adjustments.
Consumer price index data, set to be released later this week, is anticipated to offer additional insights into inflation trends and the Fed’s policy outlook. While lower interest rates are generally favorable for metal markets, a slower pace of rate cuts diminishes the appeal of non-yielding assets in the short term.
Other precious metals also experienced declines on Tuesday, with platinum futures falling 0.8% to $977.50 per ounce, and silver futures decreasing by 1.1% to $31.66 per ounce.
