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Friday, 14. June 2024

Gold prices remain stable as markets assess 2024 rate

3angleFX

Gold prices remained stable in Asian trade on Thursday, maintaining a consistent range as investors pondered the timing of potential Federal Reserve interest rate cuts.

Gold remained within a $2,000 to $2,050 range per ounce throughout the week. Despite initial momentum from the Fed’s dovish stance pushing it above $2,000, the metal faced resistance due to improved risk sentiment and uncertainties about the timing of rate cuts.

Some Fed officials cautioned that expectations for an imminent rate cut might be premature, emphasizing that inflation remains above the central bank’s 2% target.

The remarks from these officials supported a rebound in the dollar from nearly five-month lows, restricting significant upward movements in gold prices.

Spot gold edged up 0.3% to $2,036.89 an ounce, while February gold futures remained unchanged at $2,048.65 an ounce as of 00:34 ET (05:34 GMT).

March rate cut expectations continue, with upcoming inflation data in focus

Rate cut expectations for March 2024 remain high, with traders still pricing in a 70% chance despite Fed official caution.

Markets were also looking to a slew of economic readings due this week, with a revised reading on third-quarter GDP due later in the day. Strength in the U.S. economy gives the Fed more headroom to keep rates higher for longer.

Weekly jobless claims and the PCE price index are upcoming indicators, highlighting inflation and labor market resilience, crucial factors for the Fed’s decisions.

Correct, a weakening economy could lead to a weaker dollar and boost gold prices, especially as higher interest rates typically make gold less attractive due to the foregone interest income.

Copper prices near 4-month highs on China demand and supply concerns

Copper prices near a 4-month peak on Thursday, boosted by a weaker dollar and expectations of increased Chinese stimulus.

Copper futures for March remained steady at $3.9078 a pound, near early-August highs.

China’s central bank maintained its record-low benchmark loan prime rate, signaling continued loose monetary policy to bolster economic growth. Despite economic challenges, copper demand in China remains strong, and prospects are optimistic as Beijing plans further stimulus measures.

The copper market is anticipated to tighten in 2024 due to rising demand and supply constraints from significant mine closures in Panama and Peru.

 

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