👀 Ones to watch: The MOST undervalued shares to buy right nowSee Undervalued Shares

Gold prices skittish before GDP data; copper upbeat on China stimulus

Published 25/01/2024, 04:56 pm
© Reuters.
GC
-
HG
-

Investing.com-- Gold prices nursed steep losses on Thursday as anticipation of a barrage of U.S. economic and interest rate cues kept traders averse to the yellow metal, while copper sat on strong gains this week following more stimulus measures from China.

Bullion prices had fallen 0.7% on Wednesday, largely disregarding some weakness in the dollar as anticipation of key U.S. gross domestic product (GDP) and inflation data brewed more uncertainty over interest rates.

The yellow metal was battered by increasing bets that the Federal Reserve will cut interest rates later, instead of earlier this year. A series of record-high finishes on Wall Street also dented demand for gold, as traders shifted towards more risk-heavy, high-yielding assets.

But despite the losses, gold prices stuck largely to a $2,000 to $2,050 an ounce trading range established over the past week, as worsening geopolitical conditions in the Middle East spurred some safe-haven demand.

Spot gold rose 0.1% to $2,015.36 an ounce, while gold futures expiring in February steadied at $2,015.20 an ounce by 00:38 ET (05:38 GMT). Futures prices falling below the spot rate indicated that traders expected a near-term decline in gold prices.

US GDP, inflation data in focus before Fed meeting

Market focus turned squarely towards key fourth-quarter GDP data due later on Thursday, which is expected to show some cooling in growth. But the U.S. economy is also expected to remain well ahead of its peers in the developed world.

PCE price index data- the Fed’s preferred inflation gauge- is due on Friday, and is likely to show inflation remained sticky in December. Resilience in the U.S. economy and sticky inflation give the Fed more headroom to keep rates higher for longer- a warning that was voiced by several Fed officials earlier in January.

Their warnings, coupled with strong inflation and labor market readings, saw traders steadily unwind bets that the Fed could begin cutting rates by as soon as March 2024. This trend saw gold prices mark a weak start to 2024.

High rates increase the opportunity cost of buying bullion and diminish the yellow metal’s appeal. While gold is expected to eventually benefit from U.S. rate cuts this year, the potential timing of the cuts remains uncertain.

Copper at 3-week high as China doles out more stimulus

Among industrial metals, copper futures expiring in March fell 0.2% to $3.8678 a pound, but remained close to a three-week high hit on Wednesday.

Sentiment towards the red metal was boosted by China’s central bank unexpectedly cutting its reserve requirement ratio for local banks, which is expected to release nearly $140 billion of liquidity into the economy.

The People’s Bank also loosened lending requirements for the commodity-heavy property sector, and said it had more measures in the pipeline to foster a Chinese economic recovery.

The moves helped ease concerns over weakening demand in the world’s largest copper importer- which were a key weight on prices of the red metal over the past year.

But the demand outlook for copper remained uncertain, especially in the face of a potential downturn in the electric vehicle market. EV maker Tesla Inc (NASDAQ:TSLA) clocked weaker-than-expected fourth-quarter earnings and flagged weaker sales growth in 2024.

Upgrade your investing with our groundbreaking, AI-powered InvestingPro+ stock picks. Use coupon INVPRO2024 to avail a limited time discount on our Pro and Pro+ subscription plans. Click here to know more, and don't forget to use the discount code when checking out!

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.