Dec 13 2024: Gold prices held steady in Asian trading on Friday, recovering slightly from steep losses in the previous session as the dollar strengthened. Market focus remained on next week’s Federal Reserve meeting, which bolstered demand for the greenback.
Despite the recent dip, gold retained much of its weekly gains, driven by safe-haven demand amid heightened geopolitical tensions in the Middle East and Asia. Spot gold was stable at $2,687.44 an ounce, while February gold futures traded flat at $2,709.51 an ounce as of 00:00 ET (05:00 GMT). For the week, spot prices were up over 2%.
Gold Pressured by Dollar Gains as Fed Decision Approaches
Gold’s advance this week was tempered by a strengthening dollar, supported by growing market uncertainty over the Fed’s long-term interest rate strategy. While a 25 basis point rate cut is widely anticipated next week, sticky inflation data has raised doubts about the pace of rate reductions in 2025.
So far in 2024, the Fed has cut rates by 75 basis points, but expectations of slower cuts in the future, coupled with the inflationary policies anticipated under incoming President Donald Trump, are likely to keep rates elevated over the long term.
Higher interest rates increase the opportunity cost of holding non-yielding assets like gold. While the yellow metal has reached record highs earlier this year, its upward momentum has slowed in recent months.
Upcoming rate decisions from Japan and England will also attract investor attention next week.
Other Precious Metals Decline
Other precious metals saw modest declines on Friday:
- Platinum futures edged down 0.2% to $938.50 an ounce.
- Silver futures dropped 0.7% to $31.405 an ounce.
Copper Falls on Lackluster Chinese Stimulus Signals
Industrial metals, particularly copper, extended losses on Friday as traders were disappointed by limited signals of economic stimulus from China’s Central Economic Work Conference (CEWC).
- Benchmark copper futures on the London Metal Exchange remained steady at $9,093.50 a ton.
- February copper futures fell 0.4% to $4.2270 a pound.
Hopes for significant economic support had been high following dovish indications from China’s Politburo earlier this week. However, the CEWC failed to deliver additional details on the promised measures, leading to muted market reactions.