Gold Prices Inch Higher Amid Uncertainty Over US Interest Rates
Gold prices inched higher in Asian trade on Tuesday, but retained most of their losses this week as anticipation of more cues on US interest rates kept the dollar buoyant. The greenback had risen sharply on Monday after US President-elect Donald Trump threatened tariffs against the BRICS group of nations, and political turmoil in France also dented the euro and favored the dollar.
Gold rose 0.1% to $2,640.77 an ounce, while February gold rose 0.2% to $2,663.66 an ounce. The yellow metal was pressured by strength in the dollar, as investors remained biased towards the greenback before more cues on US monetary policy this week.
A slew of Fed officials are set to speak in the coming days, most notably Federal Reserve Chairman Jerome Powell on Wednesday. His address comes just weeks before the Fed’s final meeting for the year, where the central bank is widely expected to cut rates by 25 basis points. But uncertainty grew over the long-term outlook for rates, especially given recent signs of sticky inflation and resilience in the labor market.
November payrolls data is due this Friday and is widely expected to factor into the Fed’s outlook on rates. Investors are bracing for a potentially strong reading, as the impact of recent hurricane-related disruptions clears. The long-term outlook for rates was also clouded by uncertainty over the Trump administration, which is widely expected to enact expansionary and protectionist policies that could underpin interest rates and inflation.
Higher rates bode poorly for gold and other precious metals, given that they increase the opportunity cost of investing in non-yielding assets. Other precious metals were mixed on Tuesday, with platinum falling 0.3% to $948.15 an ounce, while palladium rose 0.6% to $31.058 an ounce.
Copper prices retreated on the prospect of more trade and economic headwinds for top importer China. The US imposed stricter controls on the supply of chipmaking technology to China this week. Benchmark copper on the London Metal Exchange fell 0.1% to $8,994.0 a ton, while February copper fell 0.3% to $4.1282 a pound.
