Gold slipped below $2,000 as early Fed rate cut expectations faded

Gold prices slid below crucial levels in Asian trade on Monday as robust labor market data prompted traders to reassess expectations that the Federal Reserve would start cutting interest rates sooner in 2024.

Gold slid below $2,000 as a resilient dollar and positive U.S. economic indicators reduced expectations of early Fed rate cuts, marking a reversal from last week’s record highs.

Spot gold slipped 0.4% to $1,996.24 an ounce, and gold futures for February dipped 0.1% to $2,012.75 an ounce, reflecting a decline from last week’s record highs.

Fed meeting quells March rate cut expectations

Gold prices dip below $2,000 as March rate cut expectations fade ahead of the Fed meeting

Fed’s monetary policy outlook for 2024 will be closely observed amid strong U.S. labor market data.

Nonfarm payrolls data on Friday tempered expectations for a March 2024 rate cut, leading to significant losses in the gold market.

Risk appetite increased after the nonfarm payrolls reading, suggesting a „soft landing“ for the U.S. economy. Gold prices declined, while stock markets saw gains.

The upcoming week features interest rate decisions from the Bank of England, European Central Bank, and Swiss National Bank, all expected to signal a commitment to higher-for-longer interest rates.

Higher interest rates negatively impact gold prices as they increase the opportunity cost of holding an asset that doesn’t provide yields.

U.S. inflation data for November is expected later this week, contributing to market assessments.

Copper prices dip on China disinflation, raising demand concerns

Copper prices fell on Monday due to weak economic signals from China, raising concerns about demand amid disinflation fears.

Copper futures for March dropped 0.6% to $3.8087 per pound.

Chinese consumer price index inflation contracted for the second consecutive month in November, and producer price index inflation deepened its contraction for the fourteenth consecutive month, according to weekend data.

Chinese consumer price index (CPI) inflation contracted for the second consecutive month in November, while producer price index (PPI) inflation deepened its contraction for the fourteenth consecutive month, reflecting sustained economic weakness despite Beijing’s continued liquidity measures.

Weak inflation readings in China overshadowed robust copper imports in November, signaling ongoing economic challenges despite sustained copper demand.

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