Oct 8 2024: Gold prices remained largely unchanged during Asian trading on Tuesday, stabilizing after a recent pullback from record highs. Traders are factoring in the likelihood of smaller-than-expected interest rate cuts from the Federal Reserve, contributing to the pause in the yellow metal’s rally.
Meanwhile, copper prices dropped sharply as Chinese markets reopened after a week-long holiday, with Beijing’s stimulus measures falling short of market expectations.
This week, attention is focused on signals from the Fed and crucial inflation data, which could influence future interest rate decisions.
In September, gold prices surged to all-time highs following the Fed’s 50 basis point rate cut, marking the start of an easing cycle. However, uncertainty surrounding the pace of future rate cuts has led to a retreat in gold prices. Additionally, the U.S. dollar’s strength, recently hitting seven-week highs, has further pressured metal markets.
By Tuesday, spot gold was steady at $2,642.86 per ounce, while gold futures set to expire in December edged down 0.2% to $2,661.70 per ounce.
Gold Eases from Record Highs as Traders Await More Rate Clues
After reaching record highs last month, gold has experienced a downward correction, with market participants now closely watching for further guidance on U.S. interest rates.
Much of gold’s recent losses were triggered by last Friday’s stronger-than-expected nonfarm payrolls report, which led traders to lower their expectations for aggressive future rate cuts. Current forecasts suggest an 81% chance of a 25 basis point cut in November and a 19% chance of no rate change, according to CME’s Fedwatch.
This week’s focus will be on the minutes from the Federal Reserve’s September meeting for further insight into the bank’s data-driven approach to rate cuts. Consumer price index (CPI) data, due later this week, is also anticipated to provide additional direction regarding inflation and the Fed’s outlook.
While lower interest rates tend to benefit metals, a slower pace of rate cuts makes non-yielding assets like gold less attractive in the near term.
Other precious metals were also lower on Tuesday, with platinum futures down 0.8% to $977.50 per ounce and silver futures slipping 1.1% to $31.66 per ounce.
Copper Prices Slide as Optimism Over China’s Stimulus Fades
In the industrial metals space, copper prices took a sharp hit on Tuesday as Chinese markets resumed trading after a week-long break.
Benchmark copper futures on the London Metal Exchange dropped 1.5% to $9,800.50 per ton, while one-month copper futures fell 1.9% to $4.4697 per pound.
Initially, copper had gained support from optimism surrounding China’s late-September announcement of significant stimulus measures. As the world’s largest copper importer, China’s policies greatly influence global copper demand. However, by Tuesday, the market’s enthusiasm waned as Beijing’s implementation plans for the stimulus measures failed to meet expectations.
