Gold Edges Lower Amid Inflation Concerns and Rate Cut Uncertainty

Gold prices faced slight declines during Thursday’s Asian trading session, reflecting market uncertainty over the Federal Reserve’s rate-cut trajectory. The robust U.S. economy and persistently high inflation have tempered expectations for aggressive monetary easing in the near future.

Key Factors Driving Gold Prices

1. U.S. Economic Data:
   • The Personal Consumption Expenditures (PCE) price index, a favored inflation measure by the Fed, continued to rise in October, exceeding the 2% target.
   • Strong Q3 GDP growth and resilient labor market data, evidenced by jobless claims slightly beating forecasts, reinforced doubts about the extent of the Fed’s easing in 2025.
2. Dollar Movements:
   • The dollar retreated from recent highs, offering some support to gold. A weaker dollar often makes gold cheaper for holders of other currencies, softening its decline.
3. Geopolitical Developments:
   • A ceasefire agreement between Israel and Hezbollah diminished demand for safe-haven assets, contributing to this week’s gold weakness.
4. Interest Rate Speculation:
   • Despite ongoing bets on a December rate cut, UBS analysts expect the Fed to adopt a more cautious pace for future cuts, potentially limiting gold’s upside.

Market Performance

• Spot Gold: Down 0.2% at $2,630.52 per ounce.
• Gold Futures (February): Declined 0.4% to $2,653.91 per ounce.

Other Precious Metals

• Platinum Futures: Held steady at $933.40 per ounce.
• Silver Futures: Fell by 1% to $30.255 per ounce.

Industrial Metals in Focus

1. Copper Prices:
   • Marginal declines were observed after steep losses earlier this week.
   • London Metal Exchange (LME) Copper Futures: Down 0.1% to $9,015.0 per ton.
   • February Copper Futures: Held at $4.1410 per pound.
2. China’s Role:
   • Concerns about a potential Sino-U.S. trade war have intensified following U.S. President-elect Donald Trump’s tariff threats.
   • Traders await China’s November Purchasing Managers Index (PMI) data, due Saturday, for further economic cues.

• Gold: The prospect of “higher-for-longer” interest rates, combined with geopolitical and economic uncertainties, may cap gains for gold, though continued dollar softness could offer periodic relief.
• Industrial Metals: Copper remains under pressure from trade war fears and weak demand signals from China, with markets closely watching Beijing’s potential stimulus responses.

The interplay of inflation dynamics, monetary policy shifts, and geopolitical developments will remain pivotal for precious and industrial metal markets in the coming weeks.