Gold stabilizes above $2,000 amid rate concerns

Gold prices climbed in Asian trading on Monday, continuing their recovery from one-month lows reached after a recent breach below a crucial support level. However, concerns about prolonged higher U.S. interest rates constrained price movements, keeping them mostly within a range.

Gold briefly dipped below the $2,000-an-ounce mark earlier in February, spurred by stronger-than-anticipated U.S. inflation data, which led traders to largely discount the likelihood of early interest rate cuts by the Federal Reserve.

Gold has rebounded above the support level in the last two sessions but remains confined within the $2,000-$2,050 an ounce trading range set since mid-January. The metal faces challenges amid persistent U.S. inflation and a hawkish interest rate outlook.

Spot gold climbed 0.3% to $2,019.95 an ounce, while gold futures expiring in April advanced 0.4% to $2,031.15 an ounce by 00:37 ET (05:37 GMT).

The dollar’s strength continued to exert pressure on gold, with the greenback hovering near a three-month high following Friday’s stronger-than-expected producer price index inflation data.

The producer price index data arrived shortly after a robust consumer price index reading for January. Persistent inflationary pressures provide the Federal Reserve with less motivation to swiftly implement monetary easing, as reiterated by numerous Fed officials in recent weeks.

Attention has shifted to the minutes of the Federal Reserve’s late-January meeting for insights into interest rate decisions. The Fed largely dismissed expectations of imminent rate cuts during the meeting.

Indeed, higher-for-longer interest rates pose a challenge for gold, as they elevate the opportunity cost of holding the precious metal compared to interest-bearing assets.

The impact of higher-for-longer interest rates extended to other precious metals, with platinum futures declining by 0.3% and silver futures experiencing a 1.3% drop.

Copper prices slipped amid a focus on cues from China

Copper prices retreated on Monday, although they had accumulated robust gains from the previous week, buoyed by expectations of improving economic conditions in China.

Copper futures for March delivery declined by 0.4% to $3.8083 per pound after experiencing a notable surge of over 4% in the preceding week.

The data indicating increased consumer spending in China during the Lunar New Year holiday fueled hopes for a broader economic recovery in the world’s largest copper importer.

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