Gold prices dipped slightly in Asian trading on Monday, retreating from record highs as robust U.S. payrolls data sparked expectations of a smaller interest rate cut by the Federal Reserve.
The precious metal slid from its peak levels as the dollar and U.S. Treasury yields surged following the release of strong payrolls data, leading traders to scale back their bets on a 50 basis point rate cut by the Fed.
This week, investors are closely monitoring signals from the Fed and the U.S. economy, which are likely to influence future interest rate decisions.
Gold futures for December delivery fell 0.2% to $2,647.64 an ounce, while spot gold prices dropped slightly to $2,667.10 an ounce by 00:16 ET (04:16 GMT).
Gold Prices Under Pressure from Shrinking Rate Cut Expectations
In September, gold prices surged to record highs after the Fed announced a 50 basis point rate cut and the initiation of an easing cycle.
However, stronger-than-expected economic data released on Friday led to speculations that the Fed might opt for a smaller 25 basis point rate cut in its upcoming November meeting. Market indicators suggest a more than 90% probability of this scenario.
Traders are also adjusting their positions to account for a potentially higher terminal rate by the Fed, which could dampen the appeal of gold prices. The U.S. dollar strengthened following the release of Friday’s data.
This week, investors will be paying close attention to speeches by several Fed officials and the minutes from the Fed’s September meeting for further insights on interest rates. The inflation data scheduled for later in the week is also expected to impact rate expectations.
Other precious metals, including silver and platinum, followed gold’s decline. Silver prices fell 0.5% to $997.05 an ounce, while platinum prices slipped 0.1% to $32.360 an ounce.
Copper Prices Stable Amid Focus on Chinese Stimulus
Copper prices stabilized on Monday after experiencing significant fluctuations over the past week. The outlook remains positive as investors anticipate additional stimulus measures in China, the world’s leading copper importer.
The benchmark copper price on the London Metal Exchange held steady at $9,972.0 a ton, while one-month copper futures rose 0.2% to $4.5728 a pound.
Copper initially received a boost from China’s announcement of stimulus measures in late September. However, trading volumes in the red metal declined during the week-long Chinese Golden Week holiday.
With Chinese markets set to reopen on Tuesday and an upcoming government briefing on additional stimulus, market participants will be closely monitoring developments for potential impact on copper prices.
Analysis:
The recent dip in gold prices can be attributed to the strong U.S. payrolls data, which raised expectations of a smaller interest rate cut by the Federal Reserve. This shift in rate hike bets has prompted investors to reassess their positions in precious metals, leading to declines in gold, silver, and platinum prices.
Meanwhile, copper prices have remained relatively stable, supported by the prospect of more stimulus in China. As the focus turns to Chinese markets reopening and potential government announcements, copper prices are expected to maintain their positive momentum.