Investing.com – Gold prices exhibited minimal movement in Asian trading on Thursday, maintaining a trading range established over the past week as markets speculated about when the Federal Reserve would commence interest rate trimming.
The precious metal adhered to a range between $2,000 and $2,050 per ounce observed throughout the week. Although dovish signals from the Fed assisted in surpassing the $2,000-an-ounce threshold, further gains were impeded as risk appetite improved, and traders reconsidered their expectations for early rate cuts from the Fed.
Despite recent comments from several Fed officials cautioning against overly optimistic expectations for an early rate cut, with inflation still trending above the Fed’s 2% annual target, the dollar managed to recover from near five-month lows this week, curbing significant gains in gold.
Spot gold inched up 0.3% to $2,036.89 per ounce, while gold futures expiring in February remained flat at $2,048.65 per ounce by 00:34 ET (05:34 GMT).
March Rate Cut Bets Persist, More Inflation Data Awaited: Despite pushback from Fed officials, Fed Fund futures prices indicated traders pricing in a 70% chance of a 25 basis point rate cut in March 2024.
Markets awaited a series of economic readings scheduled for the week, including a revised reading on third-quarter GDP. Strength in the U.S. economy provides the Fed with more flexibility to maintain higher rates for an extended period.
Thursday will also see the release of weekly jobless claims data, while Friday will bring a reading on the PCE price index, the Fed’s preferred inflation gauge. Inflation and labor market strength remain key points of contention for the Fed, given the surprising resilience observed in both sectors in recent months.
However, any signs of an economic slowdown are likely to weaken the dollar and boost gold. The precious metal stands to gain from a lower interest rate environment, as high rates increase the opportunity cost of investing in gold.
Copper Prices Near 4-Month High on China Hopes, Tighter Supplies: In the realm of industrial metals, copper prices lingered around a four-month high on Thursday. The weakness in the dollar and hopes for additional stimulus measures in China contributed to robust gains in the red metal.
Copper futures expiring in March stabilized at $3.9078 per pound, remaining close to highs last observed in early August.
China’s central bank maintained its benchmark loan prime rate at record lows this week, ensuring loose monetary conditions in an effort to bolster economic growth. Despite worsening economic conditions, copper demand in China has remained strong and is expected to improve in the coming months as Beijing implements additional stimulus measures.
Copper markets are anticipated to tighten in 2024, driven by increasing demand and major mine closures in Panama and Peru limiting supplies.