Gold prices held steady in Asian trade on Monday, stabilizing after recent losses as investors favored the dollar ahead of the Federal Reserve’s final policy meeting of the year.
In the industrial metals space, copper prices faced downward pressure from a strong dollar, with mixed economic data from China offering little reassurance about demand.
Last week, gold saw some support on expectations of lower U.S. interest rates in the near term. However, lingering uncertainty over the Fed’s longer-term rate outlook dampened sentiment, with further clarity expected during this week’s meeting.
Spot gold edged up 0.2% to $2,653.47 an ounce, while February gold futures dipped 0.2% to $2,671.05 an ounce by 23:02 ET (04:02 GMT).
Gold Under Pressure Ahead of Fed Meeting
Caution prevailed among gold traders as the Fed’s upcoming decision loomed. The central bank is widely anticipated to lower rates by 25 basis points at Wednesday’s meeting, marking a total reduction of 100 basis points for 2024.
However, the Fed’s stance on future rate adjustments will be in sharp focus, particularly given recent data showing persistently high inflation in November and a resilient labor market.
The Fed is expected to adopt a more cautious tone on further rate cuts, potentially signaling that rates could remain elevated for an extended period.
Higher interest rates typically weigh on gold and other non-yielding assets, as they raise the opportunity cost of holding such investments. The dollar’s strength, driven by these expectations, has exerted consistent pressure on gold prices in recent sessions. Analysts at ANZ maintained a bullish outlook on gold, predicting spot prices could reach $2,900 an ounce by 2025. While gains may slow in the coming year, elevated economic and geopolitical risks are expected to sustain safe-haven demand.
Meanwhile, other precious metals edged lower on Monday. Platinum futures slipped 0.4% to $921.75 an ounce, while silver futures dipped 0.1% to $31.005 an ounce.
Copper Slips on Disappointing China Data
Copper prices declined further as mixed economic data from China weighed on sentiment. Benchmark copper futures on the London Metal Exchange dropped 0.2% to $9,044.0 per ton, while February copper futures fell 0.4% to $4.1780 per pound.
Monday’s data painted a lackluster picture of China’s economy. While industrial production met expectations in November, retail sales growth slowed significantly, and fixed asset investment fell short of forecasts.
These weak indicators followed a high-level political meeting in China that provided little clarity on potential stimulus measures.
As the world’s largest copper importer, concerns over China’s slowing demand amid a weakening economy continue to exert downward pressure on copper prices.
