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Gold prices edged lower in Asian trading on Monday, retreating from recent record highs as stronger-than-expected U.S. payroll data tempered expectations for a significant interest rate cut by the Federal Reserve.
The precious metal declined after the robust jobs data sent the U.S. dollar and Treasury yields higher, with traders adjusting their outlook on the Fed’s next moves. Markets now anticipate a smaller rate cut in November, scaling back from previous predictions of a 50 basis point cut.
Spot gold dipped 0.2% to $2,647.64 an ounce, while gold futures for December delivery fell slightly to $2,667.10 an ounce as of 00:16 ET (04:16 GMT).
Gold Pressured by Expectations for Smaller Rate Cuts
Gold had surged to record highs in September following a 50 basis point rate cut by the Fed, which kicked off an anticipated easing cycle. However, Friday’s stronger-than-expected U.S. nonfarm payrolls report shifted market sentiment. Traders now foresee a smaller 25 basis point rate cut in November, with CME’s FedWatch tool indicating a 90% likelihood of this scenario.
With a potential higher terminal interest rate on the horizon, the environment for gold has become less favorable. As a result, the U.S. dollar surged following Friday’s data, further pressuring gold prices.
This week, attention will turn to speeches from several Federal Reserve officials and the minutes from the Fed’s September meeting, both of which are expected to offer more insight into the future direction of interest rates.
Additionally, upcoming consumer price index (CPI) inflation data could influence the outlook for monetary policy and interest rates.
Other precious metals followed gold’s decline. Platinum futures slipped 0.5% to $997.05 an ounce, while silver futures dipped 0.1% to $32.36 an ounce.
Copper Holds Steady Amid Chinese Stimulus Hopes
In industrial metals, copper prices remained steady after a volatile week, buoyed by hopes for additional stimulus measures from China, the world’s top copper importer.
Benchmark copper futures on the London Metal Exchange were unchanged at $9,972 per ton, while one-month copper futures rose 0.2% to $4.5728 per pound.
Copper initially benefited from China’s announcement of new stimulus measures in late September. However, trading volumes were lighter last week due to the week-long Golden Week holiday in China.
With Chinese markets set to reopen on Tuesday, optimism remains high that additional government stimulus measures will further support copper prices.
