Gold prices stabilized in Asian trading on Friday, following a tumultuous week marked by strong U.S. inflation data and less dovish signals from the Federal Reserve. The precious metal is on track for its worst weekly performance in over three years, as doubts over lower interest rates loom large.
Amid a risk-on rally spurred by Donald Trump’s victory in the 2024 presidential election, gold prices have been under pressure. Uncertainty over the future of interest rates under the new administration has added to the market’s jitters.
Currently, spot gold is trading at $2,569.47 an ounce, up 0.2%, while gold futures expiring in December rose 0.1% to $2,574.05 an ounce by 23:40 ET (04:40 GMT).
Gold on Track to Lose Over 4% This Week
Spot gold has experienced a 4.3% decline this week, marking its worst performance since June 2021. The initial drop in gold prices following Trump’s election victory has been exacerbated by rising risk appetite.
The surge in U.S. Treasury yields to one-year highs has further dampened gold prices amid growing uncertainty over interest rates in the near term.
With U.S. inflation data coming in higher than expected for October and Federal Reserve officials signaling a more cautious approach to rate cuts, traders have adjusted their expectations accordingly. Fed Chair Jerome Powell’s remarks about the resilience of the U.S. economy have led to a decrease in the likelihood of a December rate cut.
As traders brace for the possibility of higher interest rates in the long term, gold and other precious metals face downward pressure. Silver rose 0.3% to $946.70 an ounce, while platinum rose 0.1% to $30.610 an ounce on Friday, both suffering significant losses for the week.
Copper Prices Rise Despite Weekly Losses
Copper prices saw a modest increase following mixed economic data from China, the top importer of the metal. Despite this bounce, copper prices are set to register steep losses for the week, as stimulus measures from China failed to meet expectations.
London Metal Exchange benchmark copper rose 0.3% to $9,056.50 a ton, while December copper rose 0.5% to $4.0968 a pound. Both contracts are down between 4% and 5% for the week, marking their worst decline since early July.
Although Chinese economic indicators showed little improvement in October, copper prices were supported by strong retail sales during the Golden Week holiday.
Analysis:
The recent developments in the gold and copper markets reflect the impact of economic data, central bank policies, and geopolitical events on precious metals and industrial commodities. Rising U.S. Treasury yields and uncertainty over interest rates have put downward pressure on gold prices, while copper faces challenges from mixed economic readings and underwhelming stimulus measures from China. Investors should closely monitor these factors to make informed decisions about their portfolios and understand the potential risks and opportunities in the current market environment.