Gold prices fall as strong payroll data lowers expectations for a larger rate cut
Gold prices edged lower in Asian trading on Monday, still reeling from a sharp drop after hitting record highs. The decline followed strong U.S. payroll data, which dampened expectations for a large interest rate cut by the Federal Reserve.
The precious metal fell from its peak as the dollar and U.S. Treasury yields surged in response to the robust payroll report. This led traders to scale back predictions of another 50-basis-point rate cut by the Fed.
This week, investors will be closely monitoring signals from the Federal Reserve and key U.S. economic indicators, both of which are expected to influence interest rate decisions.
Spot gold dipped 0.2% to $2,647.64 per ounce, while December gold futures slipped slightly to $2,667.10 per ounce .
Gold pressured by smaller rate cut expectations
Gold prices had soared to record highs in September after the Fed cut rates by 50 basis points and initiated an easing cycle. However, stronger-than-expected nonfarm payrolls data released on Friday fueled speculation that the Fed would opt for a smaller 25-basis-point cut at its November meeting. According to the CME FedWatch Tool, traders now see a more than 90% chance of this scenario.
Traders are also positioning for a higher terminal rate from the Fed, which is less favorable for gold. The dollar rallied following Friday’s data release.
This week’s attention is on speeches from several Fed officials and the release of the minutes from the Fed’s September meeting, which are expected to provide further insights on interest rates. Additionally, the upcoming consumer price index (CPI) inflation data could play a key role in shaping rate expectations.
Other precious metals
Platinum futures dropped 0.5% to $997.05 per ounce, while silver futures declined 0.1% to $32.36 per ounce, tracking gold’s movement.
Copper steadies as China stimulus remains in focus
In the industrial metals market, copper prices stabilized on Monday after experiencing significant volatility in the previous week. Optimism over additional stimulus measures from China, the world’s top copper importer, helped keep sentiment positive.
Benchmark copper futures on the London Metal Exchange held steady at $9,972.00 per ton, while one-month copper futures inched up 0.2% to $4.5728 per pound.
Copper initially surged after China announced new stimulus measures in late September. However, trading volumes declined last week due to China’s week-long Golden Week holiday. With Chinese markets set to reopen on Tuesday and further government stimulus announcements expected, traders are closely watching for developments.
