Gold Prices Steady as CPI Data Looms; Copper Gains on China Stimulus Plans
Gold prices remained relatively stable in Asian trading on Thursday, as the market focused on the upcoming U.S. consumer price index (CPI) data, which is expected to provide further insight into the Federal Reserve’s future interest rate decisions. A stronger dollar has kept pressure on the precious metal, which has struggled to regain its recent record highs amid shifting expectations for Fed policy.
Spot gold rose modestly by 0.2% to $2,613.15 an ounce, while gold futures for December delivery inched up 0.2% to $2,630.20 an ounce as of 00:16 ET (04:16 GMT). Despite the slight gains, gold’s momentum has been capped by market sentiment that sees the Fed cutting rates more gradually than previously anticipated.
CPI Data in Focus for Rate Direction
The CPI data, set for release later on Thursday, is anticipated to play a critical role in shaping the Federal Reserve’s stance on interest rates. Analysts expect a slight decrease in headline inflation, while core CPI is projected to remain sticky, suggesting persistent price pressures. Such an outcome could solidify the Fed’s cautious approach to rate cuts, reducing the likelihood of aggressive easing.
The Fed’s September meeting minutes indicated a general agreement among policymakers on a 50 basis point cut but showed hesitancy about the pace of further reductions. Traders, who have now ruled out the chance of another 50 bps cut in November, will look to the CPI figures for more clarity on the Fed’s next steps. Smaller cuts in interest rates tend to dampen the appeal of non-yielding assets like gold by increasing their opportunity cost.
Copper Prices Recover on China’s Stimulus Hopes
Copper prices saw a lift on Thursday, with benchmark futures on the London Metal Exchange rising 0.6% to $9,749.50 a ton, while December copper futures increased by 0.5% to $4.4355 a pound. The gains followed a rough week for the red metal, driven by underwhelming monetary stimulus from China, which is the world’s largest importer of copper.
However, optimism grew after Beijing signaled plans for fiscal stimulus, with a detailed announcement expected from the Chinese finance ministry on Saturday. Investors have been eagerly awaiting targeted measures that could bolster economic growth in China, especially as the country grapples with deflationary pressures and a prolonged downturn in its property market.
While the prospect of Chinese stimulus provides some support for copper, broader concerns over global economic conditions and the strength of the U.S. dollar continue to keep the market cautious.
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