Gold prices retreated from a two-week high during Asian trading on Thursday as investors assessed the implications of U.S. consumer inflation data, which aligned with expectations, on future interest rate decisions.
In industrial metals, copper prices extended gains driven by optimism surrounding additional stimulus measures from China, the world’s largest importer.
Gold saw gains earlier this week, supported by increased safe-haven demand amid rising geopolitical tensions in the Middle East and Asia. However, a strong U.S. dollar continued to cap overall advances in metal markets.
Spot gold dipped 0.1% to $2,715.14 per ounce, while February gold futures dropped 0.3% to $2,747.61 per ounce as of 23:35 ET (04:35 GMT).
In-line CPI Data Strengthens December Rate Cut Expectations
Gold surged in overnight trade after consumer price index (CPI) data met forecasts, prompting traders to raise expectations of a Federal Reserve rate cut next week. According to the CME FedWatch tool, markets are pricing in a 98% likelihood of a 25 basis point cut.
Despite this, gold’s upward momentum was restrained by improved risk sentiment, with Wall Street indices rallying on the prospect of near-term rate reductions.
The dollar’s resilience also weighed on gold prices, as investors favored the greenback amid uncertainty over the longer-term trajectory of inflation and interest rates. The CPI report indicated inflation at its highest level in seven months, a development likely to keep the Fed cautious about further monetary easing.
Attention now shifts to producer price index (PPI) data set to be released later on Thursday, just days ahead of the Fed’s final meeting of the year.The central bank’s rate outlook will be closely monitored, with increasing speculation that it may adopt a slower pace of easing in 2025.
Among other precious metals, performance was mixed after modest gains earlier in the week. Platinum futures rose 0.6% to $956.45 per ounce, while silver futures held steady at $32.955 per ounce.
Copper Rises on Optimism Over China Stimulus
Benchmark copper futures on the London Metal Exchange climbed 0.8% to $9,251.0 per ton, while February copper futures gained nearly 1% to $4.3033 per pound.
Both contracts reached a one-month high on Wednesday, buoyed by optimism surrounding additional stimulus measures from China, the world’s largest copper importer.
After a meeting on Monday, Beijing’s Politburo adopted its most dovish stance yet, signaling plans to ease monetary policy further to support economic growth.
The Central Economic Work Conference, a key government meeting, is expected to conclude later on Thursday, outlining China’s economic agenda for 2025 and providing more clarity on potential stimulus measures.
