Investing.com — Gold prices rose slightly in Asian trading on Tuesday, stabilizing after a race to record highs earlier this week, as continued expectations of a less dovish Federal Reserve and increased demand for safe havens supported the yellow metal.
The yellow metal saw an abnormally large jump in early trading on Monday, with spot prices briefly hitting a lifetime high of $2,148.78 an ounce before falling sharply from the peak.
A combination of factors drove the increase, the most notable of which were somewhat less aggressive signals from the Federal Reserve, which increased expectations for a speedy rate cut by the central bank.
Safe haven demand for the yellow metal rose after an attack on US ships in the Red Sea raised concerns about a wider conflict in the Middle East. A separate, unrelated attack on a prominent gold mine in Peru also raised fears of supply disruptions in gold markets.
But while gold came off sharply from all-time highs, it still remained well above the coveted $2,000 per ounce level, suggesting more gains are in store. rose 0.2% to $2,032.60 per ounce, while in February the price rose 0.4% to $2,050.35 per ounce at 00:19 ET (05:19 GMT).
Markets reassess rate cuts ahead of nonfarm payrolls data
Anticipation of key US data last Friday caused markets to tone down some of the recent optimism surrounding the Federal Reserve’s early rate cuts.
showed that traders are now pricing in a 49% chance that the central bank will cut rates as early as March 2024, down significantly from the 60% chance at the start of the week.
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This uncertainty also helped further the recovery from recent lows, which in turn reduced gold’s recent gains.
Still, the yellow metal is expected to continue to hold up largely as markets remained confident that the Fed was done raising rates this cycle. Rising interest rates are raising the opportunity cost of investing in precious metals, a trade that plagued the yellow metal earlier this year.
Gold also posted strong gains in November.
Copper prices remained stable despite mixed signals from China
Among industrial metals, copper prices rose slightly on Tuesday, although traders in the red metal received mixed signals from major copper importer China.
expiring in March rose 0.1% to $3.8303 per pound.
A private survey showed China’s economy grew stronger than expected in November, just a few days after a private survey showed unexpected resilience in the economy.
But optimism about the figures was largely offset by growing concerns about a new epidemic in the country, following a spike in respiratory diseases in major Chinese cities. Local media reports said the National Health Commission – which was at the heart of the country’s draconian anti-COVID measures – was considering curbing social gatherings.
