Gold prices fell on Monday, pressured by expectations that the U.S. Federal Reserve may not reduce interest rates as sharply as previously anticipated, following stronger-than-expected U.S. jobs data that boosted the dollar.
By 3:57 p.m. ET (20:57 GMT), spot gold had dropped 1% to $2,662.20 an ounce. Gold futures for February delivery were down 1.3%, settling at $2,680.01 an ounce.
The decline in gold prices came amid growing concerns that U.S. interest rates could remain elevated for a longer period. Friday’s robust nonfarm payrolls data led traders to scale back expectations for rate cuts this year. Investors are now awaiting U.S. inflation data, set to be released on Wednesday, for further guidance on the Fed’s monetary policy outlook. The central bank has suggested that persistent inflation and a strong labor market would likely support its stance on maintaining higher rates.
Analysts at Goldman Sachs recently revised their forecast, now predicting that the Fed will only cut rates twice this year, down from their previous expectation of three cuts. Additionally, the central bank’s terminal rate is expected to be higher in this easing cycle than previously anticipated.
Despite the pressure on gold from rising rate expectations, some demand for the yellow metal remained due to ongoing economic uncertainty under the incoming administration of President Donald Trump. This, coupled with an extended sell-off in risk-driven assets such as stocks, helped limit gold’s overall losses.
Higher interest rates typically weigh on precious metal markets by increasing the opportunity cost of holding non-yielding assets. Other metals also saw declines, with platinum futures falling 2.6% to $970.35 an ounce and silver futures dropping 3.3% to $30.282 an ounce.
Copper Prices Climb Amid Strong Chinese Demand
Copper prices, on the other hand, rose on Monday, continuing their upward momentum from the previous week. Benchmark copper futures on the London Metal Exchange were up 0.2% at $9,098.00 an ounce, while March copper futures gained 0.4%, reaching $4.3217 a pound.
The gains were fueled by expectations that China, the world’s largest copper importer, would introduce further stimulus measures to support its economy. Recent trade data revealed that China’s copper imports surged to a 13-month high of 559,000 metric tons in December, signaling robust demand despite softer economic data.
As President Donald Trump prepares to take office on January 20, markets are anticipating that Beijing may boost stimulus efforts to counter the impact of potential trade tariffs. Trump has vowed to impose significant tariffs on Chinese imports from his first day in office, further influencing market sentiment.
Related topics:
- India Surpasses China in Gold Purchases, Buying 51% More in Three Months
- Gold Rates Skyrocket in Chennai on Diwali, 24K Gold Exceeds Rs. 81,000 Per 10 Grams
- Gold and Silver Prices Rise Across India on January 13, 2025
