Gold Quiet, Copper Dips on Zambia Find

In holiday-thinned Asian trade on Monday, gold prices showed minimal movement, maintaining a trading range set over the past week as traders awaited upcoming U.S. inflation data for further cues.

Copper prices dipped to a near three-month low after KoBold Metals, a startup supported by Microsoft founder Bill Gates, discovered a significant copper deposit in Zambia, potentially forming a substantial copper mine.

As anticipation of early interest rate cuts by the Federal Reserve diminished, gold retreated into a trading range between $2,000 and $2,050 in February. Market sentiment shifted as expectations of a rate cut in March and May were gradually priced out.

The lack of direct cues in the past week left gold traders seeking direction, with attention now turning to the upcoming consumer price index (CPI) data as the next significant signal.

Spot gold dipped 0.1% to $2,023.48 per ounce, while gold futures for April delivery declined 0.1% to $2,037.20 per ounce by 00:07 ET (05:07 GMT). Trading volumes were subdued due to market holidays observed in China, Hong Kong, South Korea, and Japan.

Market attention on CPI figures and Fed signals

Gold is anticipated to experience limited movement ahead of the U.S. CPI data release on Tuesday. Although forecasts suggest a further easing of inflation in January, expectations remain for price pressures to stay considerably above the Fed’s 2% annual target. This scenario provides the central bank with greater motivation to maintain higher interest rates for an extended period.

In addition to the inflation data, a string of Fed officials, including Neel Kashkari, Mary Daly, and Raphael Bostic, are scheduled to speak this week.

Fed officials are anticipated to reaffirm recent statements indicating that the central bank is not rushing to start reducing interest rates. This sentiment had triggered significant declines in gold earlier in February, as higher rates increase the opportunity cost of investing in the yellow metal.

The dollar also stayed within reach of a recent three-month high, exerting downward pressure on gold prices.

Despite the challenges, gold maintained its position above the critical $2,000 an ounce support level, though analysts warned that it could face testing times in the days ahead.

Copper prices declined following the discovery of a substantial deposit in Zambia.

Copper prices dropped on Monday, continuing losses from the previous session amid concerns about a possible rise in global supplies.

Copper futures expiring in March declined by 0.4% to $3.6727 a pound, marking their lowest level since mid-November.

KoBold Metals, a startup supported by Microsoft founder Bill Gates, announced the discovery of a significant copper deposit in Zambia, potentially paving the way for one of the world’s largest mines.

Zambian President Hakainde Hichilema mentioned that the deposit, located in the Mingomba Project, has the potential to yield between 500 to 600,000 metric tons of copper when operational. For context, Chile’s Escondida Mine, recognized as the world’s largest copper mine by production, produced approximately 1 million tons of copper in 2022.

The discovery suggests a potential rise in copper supplies in the coming years, putting pressure on prices of the red metal. Typically, copper prices benefit from tighter market conditions.

Copper has been experiencing significant losses in 2024 due to ongoing worries about slowing demand in China, its largest importer.

 

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