Gold Prices Pause Near 7-Month High
Gold Prices Fall Slightly
Gold prices fell slightly on Thursday, pausing a recent rally as markets awaited more cues on U.S. monetary policy from a key inflation reading due later in the day.
Yellow Metal Remains Close to Seven-Month Peak
Despite the slight fall, the prices of the yellow metal remained close to a seven-month peak hit earlier this week, as expectations of a less hawkish Federal Reserve, a weaker dollar, and some increased safe haven demand spurred strong gains in November.
Gold Prices and the Yellow Metal
Gold fell 0.1% to $2,042.10 an ounce, while gold expiring in December fell 0.2% to $2,044.10 an ounce by 00:41 ET (05:41 GMT). Both instruments were up between 2.5% and 3.1%, their second straight month of strong gains.
PCE Inflation and More Fed Cues in Focus
The yellow metal saw stellar gains this week as a string of Fed officials said that recent declines in inflation suggested that the central bank will likely not raise interest rates any further, and that a further easing in inflation may also spur the bank into cutting rates in early-2024.
The trend pointed to easing pressure on gold from high interest rates- a trade that had battered the yellow metal over the past 18 months.
U.S. Interest Rates and Gold
Easing U.S. interest rates- particularly the prospect of early rate cuts in 2024- bode well for gold, given that high interest rates push up the opportunity cost of buying bullion.
Copper Rises Past Weak China Data
Among industrial metals, copper prices rose slightly on Thursday, shrugging off weaker-than-expected economic readings from top copper importer China.
Market Tightening and Copper
Purchasing managers index data showed that Chinese manufacturing shrank more than expected in November, extending a decline as export demand dwindled. The downturn pointed to a potential cooling in copper demand.
But this notion was offset by signs of tighter copper markets, following major mine closures in Peru and Panama, which are expected to limit copper supplies in the coming months. Increased demand for electric vehicles and a green energy push are also expected to offset declining Chinese demand.
