Gold prices face pressure due to uncertainty surrounding interest rates, with upcoming cues from the Fed and inflation on the horizon
Gold prices declined during Asian trading on Wednesday, continuing a downward trend from record highs as market participants increasingly anticipate that the Federal Reserve will implement interest rate cuts at a slower pace in the upcoming months.
A strong dollar further pressured the broader metals market, with expectations of a smaller rate cut from the Fed driving up U.S. Treasury yields.
Spot gold dropped 0.2% to $2,615.90 per ounce, while December gold futures edged down to $2,634.20 per ounce.Earlier this month, spot prices had reached a record high of $2,685.96 per ounce.
Gold prices face pressure amid Fed and inflation uncertainty
Gold prices were impacted by uncertainty surrounding U.S. interest rates, as more traders are betting on a modest 25 basis points rate cut from the Fed in November.
The minutes from the Fed’s September meeting, which are set to be released later on Wednesday, are anticipated to shed light on the central bank’s future direction. The Fed had lowered rates by 50 basis points in September, marking the beginning of an easing cycle.
However, strong payroll data for September has raised questions about the necessity for the Fed to continue aggressive rate cuts. This sentiment strengthened the dollar and negatively affected precious metal prices, as higher rates reduce their attractiveness.
Consumer price index inflation data, scheduled for release on Thursday, is also expected to influence the Fed’s decision-making.
Other precious metals show mixed performance
Other precious metals experienced a mixed day on Wednesday, though they continued to reflect losses from recent sessions. Platinum futures fell 0.1% to $964.90 per ounce, while silver futures increased by 0.8% to $30.865 per ounce.
Copper prices experience significant losses amid China concerns
In the realm of industrial metals, copper prices saw a slight uptick on Wednesday but were still grappling with substantial losses from previous sessions, as optimism over additional stimulus measures in leading importer China faded.
Benchmark copper futures on the London Metal Exchange rose 0.9% to $9,844.0 per ton, while December copper futures increased 0.5% to $4.4975 per pound.
Both contracts fell around 2% on Tuesday after China’s top economic planner provided limited guidance on how the government would execute its recently announced stimulus measures.
Investors were also let down by the absence of fiscal stimulus initiatives from China, despite ongoing calls for more targeted economic support from the world’s largest copper importer.
