Gold Prices Steady Amid Dollar Strength and Fed Meeting Anticipation

Gold prices stabilized during Friday’s Asian trading session after experiencing significant losses the previous day. A stronger U.S. dollar, fueled by expectations surrounding next week’s Federal Reserve meeting, weighed on the yellow metal. However, gold retained most of its weekly gains, supported by heightened geopolitical tensions in the Middle East and Asia that bolstered safe-haven demand.

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Key Highlights

• Spot Gold: Held steady at $2,687.44 an ounce.
• Gold Futures (February): Flat at $2,709.51 an ounce.
• Weekly Performance: Spot prices up 2% this week.

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Factors Influencing Gold

1. Dollar Strength Ahead of Fed Meeting
   • The dollar gained traction as markets priced in a 25 bps rate cut by the Federal Reserve next week.
   • Uncertainty over the Fed’s long-term rate strategy, particularly in light of sticky U.S. inflation, added to pressure on gold.
   • The Fed has already cut rates by 75 bps in 2024 but is expected to slow the pace in 2025, partially due to potential inflationary pressures from Donald Trump’s incoming administration.
   High interest rates generally dampen gold’s appeal, increasing the opportunity cost of holding non-yielding assets.
2. Geopolitical Tensions Bolstering Demand
   • Ongoing conflicts and tensions in the Middle East and Asia have supported safe-haven demand for gold, contributing to its weekly gains.
3. Other Precious Metals
   • Platinum: Dropped 0.2% to $938.50 an ounce.
   • Silver: Fell 0.7% to $31.405 an ounce.

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Copper Prices Decline Amid Disappointment from China’s CEWC

Copper prices extended losses on Friday after failing to gain momentum from China’s Central Economic Work Conference (CEWC). The market had high hopes for detailed stimulus measures following dovish signals from the Politburo earlier in the week.

• LME Benchmark Copper: Steady at $9,093.50 a ton.
• February Copper Futures: Declined 0.4% to $4.2270 a pound.

The lack of substantial new economic support measures from the CEWC disappointed traders, adding to concerns over the strength of China’s economic recovery.

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Next Week’s Focus

• Global Central Banks: In addition to the Federal Reserve, interest rate decisions in Japan and England will be closely monitored.
• Geopolitical Developments: Continued focus on global tensions that may drive safe-haven demand for precious metals.

Gold’s trajectory will largely hinge on the Federal Reserve’s policy direction and broader macroeconomic signals in the coming weeks.