Gold prices hovered near a two-week high in Asian trading on Wednesday, supported by geopolitical tensions in Asia and the Middle East, which bolstered safe-haven demand.
The precious metal also saw buying interest as markets adopted a cautious stance ahead of critical U.S. inflation data set to be released later in the day, likely influencing the outlook for interest rates.
In the industrial metals market, copper prices surged on continued optimism over potential stimulus measures in China, the world’s largest importer. Sentiment was further buoyed by encouraging copper import data from the country.
Spot gold remained steady at $2,694.16 per ounce, while February gold futures climbed 0.8% to $2,739.82 per ounce as of 23:29 ET (04:29 GMT).
Geopolitical tensions drive haven demand
This week’s gold gains were fueled by escalating geopolitical tensions. In the Middle East, the overthrow of the Syrian government by rebels sparked concerns over the region’s stability, particularly regarding Iran’s influence.
In Asia, Taiwan heightened its alert level after China reportedly conducted its largest maritime operation around the island in decades, involving approximately 90 ships in military drills.
Political turmoil in South Korea also grabbed attention, as President Yoon Suk Yeol faced criminal charges over an unsuccessful attempt to impose martial law last week.
CPI data in focus as dollar strengthens
Apart from geopolitical risks, market sentiment was weighed down by the anticipation of key U.S. Consumer Price Index (CPI) data on Wednesday, which is expected to play a significant role in shaping the Federal Reserve’s interest rate strategy. While the dollar strengthened ahead of the CPI release, it had little impact on gold’s momentum, as markets continued to anticipate a 25-basis-point rate cut by the Federal Reserve next week.
Other precious metals showed mixed performance. Platinum futures edged up 0.3% to $950.80 an ounce, while silver futures slipped 0.2% to $32.678 an ounce.
Copper boosted by China optimism; CEWC in spotlight
Benchmark copper futures on the London Metal Exchange climbed 0.4% to $9,277.50 per ton, while February copper futures advanced 0.6% to $4.2978 per pound.
Copper prices surged this week following China’s commitment to easing monetary policy and introducing targeted fiscal measures aimed at spurring economic growth.
Attention now turns to China’s Central Economic Work Conference (CEWC), which begins Wednesday and is expected to outline the country’s economic priorities for 2025, including potential stimulus initiatives.
Additionally, data showing a significant rise in Chinese copper imports during November further supported market sentiment.
