Gold Prices Inch Higher in Asian Trade Amid Dollar Strength
Gold prices edged higher in Asian trading on Tuesday, but remained mostly lower for the week as investors awaited further signals on U.S. interest rates, supporting the dollar.
The dollar surged on Monday following threats of tariffs by U.S. President-elect Donald Trump against the BRICS group, while political turmoil in France weighed on the euro, boosting the dollar.
Gold rose 0.1% to $2,640.77 an ounce, while gold futures for February delivery gained 0.2% to $2,663.66 an ounce by 23:16 ET (04:16 GMT).
Gold Faces Pressure Ahead of Powell Speech and Payrolls Data
The yellow metal remained under pressure due to the strength of the dollar, as investors maintained a bias towards the greenback in anticipation of more information on U.S. monetary policy this week.
Several Federal Reserve officials are scheduled to speak in the upcoming days, with a notable speech by Powell on Wednesday. This comes ahead of the Fed’s final meeting of the year, where a 25 basis points rate cut is widely expected.
However, uncertainty has arisen regarding the long-term outlook for rates, particularly in light of recent signs of persistent inflation and a robust labor market.
November payrolls data, set to be released this Friday, is expected to influence the Fed’s rate outlook. Investors are preparing for a potentially strong report as the impact of recent hurricane-related disruptions fades.
The long-term rate outlook is further clouded by uncertainty surrounding the Trump administration and its expected policies, which could support interest rates and inflation.
Higher rates are typically negative for gold and other precious metals as they increase the opportunity cost of investing in non-yielding assets.
Other precious metals saw mixed results on Tuesday, with silver falling 0.3% to $948.15 an ounce, while platinum rose 0.6% to $31.058 an ounce.
Copper Declines Amid Ongoing China Headwinds
Copper prices retreated on concerns of additional trade and economic challenges for top importer China, as the U.S. imposed stricter controls on chipmaking technology supply to China this week.
Benchmark copper on the London Metal Exchange dipped 0.1% to $8,994.0 a ton, while February copper fell 0.3% to $4.1282 a pound.
Despite some support from positive business activity indicators in China, traders are awaiting further developments from key political meetings in December that could impact the market.
The deteriorating trade relations between the U.S. and China are expected to potentially weaken China’s economy, affecting its demand for copper.
Analysis:
Gold prices saw a slight increase in Asian trading, but remained under pressure due to the strength of the dollar. Investors are eagerly awaiting signals on U.S. interest rates, with upcoming speeches from Federal Reserve officials and the release of November payrolls data likely to influence market sentiment. Uncertainty surrounding the long-term rate outlook, coupled with potential policy changes under the Trump administration, could impact the precious metals market. Meanwhile, copper prices faced declines amid concerns over trade relations between the U.S. and China, highlighting ongoing economic challenges for the top importer. Traders are closely monitoring developments in China that could further impact the copper market.