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Gold prices remained stable in Asian trading on Tuesday after retreating from record highs, as investors reassessed the likelihood of smaller interest rate cuts by the Federal Reserve. Meanwhile, copper prices dropped sharply as Chinese markets reopened following a week-long holiday, with disappointment over Beijing’s implementation of its stimulus measures weighing on sentiment.
The focus this week shifts to further cues from the Fed and upcoming key inflation data, both of which are likely to shape future rate decisions.
Gold Prices Steady After Recent Decline
Gold surged to record highs in September after the Fed cut rates by 50 basis points and initiated an easing cycle. However, uncertainty surrounding the pace of future rate cuts led to a pullback in the yellow metal’s value. The strengthening U.S. dollar, which hit seven-week highs recently, added additional pressure on gold prices.
- Spot gold held steady at $2,642.86 an ounce.
- Gold futures for December delivery edged down 0.2% to $2,661.70 an ounce.
The recent drop in gold prices followed Friday’s stronger-than-expected U.S. nonfarm payrolls data, which dampened expectations for aggressive rate cuts. Traders are now pricing in an 81% chance of a 25 basis point cut by the Fed in November, with only a 19% chance for further cuts, according to CME FedWatch.
The release of the minutes from the Fed’s September meeting, expected later this week, will offer more insight into the central bank’s outlook for interest rates. Additionally, U.S. Consumer Price Index (CPI) data will provide more clues on inflation trends and how they could influence the Fed’s future actions.
Other precious metals also faced declines:
- Platinum futures dropped 0.8% to $977.50 an ounce.
- Silver futures slid 1.1% to $31.66 an ounce.
Copper Prices Decline as China Stimulus Disappoints
Among industrial metals, copper prices fell sharply on Tuesday as Chinese markets reopened after the Golden Week holiday. Optimism surrounding China’s late-September stimulus announcements faded, as the government’s plans to implement the measures appeared underwhelming.
- Benchmark copper futures on the London Metal Exchange fell 1.5% to $9,800.50 per ton.
- One-month copper futures declined 1.9% to $4.4697 per pound.
Copper had initially benefited from China’s stimulus measures, given the country’s status as the world’s largest copper importer. However, the lack of clarity on how these measures will be implemented has dampened market sentiment.
