Gold Prices Stagnate as Traders Await U.S. Inflation Data
Gold prices showed minimal movement in quiet Asian trading on Monday, maintaining a narrow trading range as traders anticipated upcoming U.S. inflation data for further guidance.
Copper prices, on the other hand, plummeted to a nearly three-month low following the discovery of a significant copper deposit in Zambia by KoBold Metals, a startup supported by Microsoft founder Bill Gates.
The dwindling hopes of early interest rate cuts by the Federal Reserve caused gold to settle within a $2,000 to $2,050 range in February, as market expectations of a rate cut in March and May faded.
The lack of clear signals over the past week left gold without significant direction, with traders now looking to the upcoming consumer price index (CPI) data as the next major indicator.
Gold prices edged down 0.1% to $2,023.48 an ounce, while April futures fell 0.1% to $2,037.20 an ounce by 00:07 ET (05:07 GMT). Trading volumes were subdued due to market holidays in China, Hong Kong, South Korea, and Japan.
CPI Data and Fed Signals Take Center Stage
Gold’s movement is expected to remain muted ahead of the U.S. CPI data release on Tuesday. While the data is anticipated to show a further easing of inflation in January, price pressures are still expected to exceed the Fed’s 2% annual target, potentially prompting the central bank to maintain higher interest rates.
In addition to the inflation data, a lineup of Fed officials, including , , and , are scheduled to speak this week.
Fed officials are expected to reiterate recent comments indicating that the central bank is not in a rush to start trimming interest rates. This sentiment had triggered significant losses in gold earlier in February, as higher rates increase the opportunity cost of investing in the precious metal.
The dollar also remained close to a recent three-month high, exerting pressure on gold prices.
Despite this, gold managed to hold above the $2,000 an ounce support level, although analysts cautioned that this level could be tested in the coming days.
Copper Prices Sink on Zambia Discovery
Copper prices extended their decline on Monday, amid concerns of a potential surge in global supplies.
March futures fell 0.4% to $3.6727 a pound, marking their lowest level since mid-November.
KoBold Metals’ revelation of a substantial copper deposit in Zambia’s Mingomba Project raised the possibility of one of the world’s largest copper mines.
Zambian President Hakainde Hichilema stated that the deposit could yield between 500 to 600,000 metric tons of copper when operational, potentially rivaling Chile’s Escondida Mine, the world’s largest copper mine by production.
This discovery signals a potential increase in copper supplies over the coming years, adding more pressure on the red metal’s prices, which typically benefit from tighter market conditions.
Copper was already grappling with significant losses in 2024 due to persistent concerns about slowing demand in China, the top importer of the metal.
