Dec 11 2024: Gold prices remained stable near a two-week high during Asian trading on Wednesday, supported by safe-haven demand stemming from geopolitical tensions in Asia and the Middle East. Investor caution ahead of key U.S. inflation data also contributed to the yellow metal’s strength.
Industrial metals saw gains, with copper prices rising sharply on optimism over potential stimulus measures in China, the world’s largest copper importer. Positive import data further boosted market sentiment.
Spot gold held steady at $2,694.16 an ounce, while February gold futures rose 0.8% to $2,739.82 an ounce as of 23:29 ET (04:29 GMT).
Geopolitical Tensions Drive Safe-Haven Demand
Geopolitical instability provided a strong tailwind for gold prices:
- Middle East: Safe-haven demand surged after rebels ousted the Syrian government, raising uncertainty over Iran’s influence in the region.
- Asia: Tensions escalated as Taiwan issued an alert over China’s largest maritime maneuvers in decades, involving approximately 90 ships conducting war drills around the island.
- South Korea: Political turmoil intensified with President Yoon Suk Yeol facing criminal charges following a failed attempt to impose martial law last week.
CPI Data and Dollar Movement in Focus
Anticipation of the U.S. consumer price index (CPI) reading weighed on risk appetite. The data is expected to shape the Federal Reserve’s interest rate decisions, with markets pricing in a likely 25-basis-point rate cut next week.
While the dollar firmed ahead of the CPI release, it had a limited impact on gold prices as investors continued to seek safe-haven assets.
Among other precious metals:
- Platinum futures: Gained 0.3% to $950.80 an ounce.
- Silver futures: Edged down 0.2% to $32.678 an ounce.
Copper Prices Gain on China Stimulus Hopes
Copper prices strengthened amid optimism over China’s potential stimulus measures and encouraging trade data.
- London Metal Exchange (LME): Benchmark copper futures rose 0.4% to $9,277.50 a ton.
- February copper futures: Climbed 0.6% to $4.2978 a pound.
The rally followed China’s pledge to loosen monetary policy and implement targeted fiscal measures to boost economic growth. Investors are closely watching the Central Economic Work Conference, which begins Wednesday and is expected to outline China’s 2025 economic agenda, including potential stimulus initiatives.
Additionally, data showing a sharp increase in China’s copper imports for November further supported bullish sentiment in the copper market.