Gold prices showed little movement in early Asian trading on Monday, consolidating some of the losses from previous sessions as investors maintained a cautious stance, awaiting the Federal Reserve’s final meeting of the year.
Gold’s Outlook Uncertain Ahead of Fed Meeting
Gold prices received some support last week on the back of expectations that the U.S. Federal Reserve may lower interest rates in the near term. However, this optimism was tempered by uncertainty surrounding the long-term trajectory of U.S. rates, which the Fed is expected to clarify later this week.
Spot gold edged up by 0.2%, reaching $2,653.47 per ounce, while February gold futures declined 0.2%, settling at $2,671.05 per ounce as of 23:02 ET (04:02 GMT).
With the Fed’s meeting looming, market participants remained cautious about the yellow metal’s outlook. The central bank is widely anticipated to announce a 25-basis-point rate cut on Wednesday, marking a total reduction of 100 basis points in 2024. However, the Fed’s stance on future rate cuts will be a key focus, particularly following recent data that revealed inflation remained persistent in November, while the U.S. labor market continued to show strength.
This mixed economic backdrop is expected to prompt the Fed to take a more cautious approach toward additional rate cuts, which could keep rates elevated for an extended period. High interest rates tend to exert downward pressure on gold and other non-yielding assets by increasing the opportunity cost of holding them.
As the dollar strengthened in response to expectations of prolonged high rates, gold prices faced additional headwinds throughout the past week. However, analysts at ANZ maintained a bullish outlook on gold, projecting spot prices to reach $2,900 per ounce by 2025. While price gains are expected to moderate next year, geopolitical risks and economic uncertainty are likely to sustain demand for gold as a safe-haven asset.
Precious Metals Struggle
Other precious metals also faced pressure on Monday. Platinum futures fell 0.4% to $921.75 per ounce, while silver futures slipped 0.1%, trading at $31.005 per ounce.
Copper Prices Decline on Weak China Data
In industrial metals, copper prices came under pressure, continuing their downward trajectory due to a strong dollar and disappointing economic data from China. Benchmark copper futures on the London Metal Exchange dropped 0.2%, to $9,044 per ton, while February copper futures fell 0.4%, settling at $4.1780 per pound.
The decline followed mixed economic indicators from China, the world’s largest copper importer. Industrial production in November grew in line with expectations, but retail sales growth slowed significantly, and fixed asset investment growth fell short of forecasts. These figures weighed on investor sentiment, especially as a recent high-level political meeting in China provided few indications of imminent economic stimulus measures.
The ongoing concerns about slowing demand from China, coupled with broader economic weaknesses, continue to weigh on copper prices.
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