Gold Prices Hold Steady Amid Fed Meeting Expectations; Copper Pressured by Weak China Data

Gold prices remained relatively flat during Asian trading on Monday as investors tread cautiously ahead of the Federal Reserve’s final policy meeting for 2024. A stronger dollar and mixed signals on U.S. interest rate expectations added pressure to the precious metal, while industrial metals, such as copper, faced headwinds from disappointing economic data in China.

Gold Market Overview

• Spot Gold: Increased 0.2% to $2,653.47 an ounce.
• Gold Futures (Feb): Fell 0.2% to $2,671.05 an ounce by 04:02 GMT.

Factors Impacting Gold Prices:

1. Fed Rate Decision:
   • The Federal Reserve is widely expected to cut interest rates by 25 basis points on Wednesday, marking a total reduction of 100 bps in 2024.
   • However, the Fed’s outlook for future rate cuts remains uncertain, particularly after data showed persistent inflation and robust labor market performance in November.
   • High interest rates reduce the appeal of non-yielding assets like gold by increasing the opportunity cost of holding them.
2. Dollar Strength:
   • The U.S. dollar firmed on expectations of a cautious Fed stance, adding downward pressure on gold prices.
3. Bullish Long-Term Forecast:
   • Despite near-term headwinds, ANZ analysts remain optimistic about gold’s trajectory, projecting spot prices to reach $2,900 an ounce by 2025 due to sustained economic and geopolitical risks.

Other Precious Metals:

• Platinum: Fell 0.4% to $921.75 an ounce.
• Silver: Edged down 0.1% to $31.005 an ounce.

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Copper Prices Dip Amid Weak Chinese Demand Outlook

• London Metal Exchange Copper Futures: Fell 0.2% to $9,044.0 per ton.
• February Copper Futures: Declined 0.4% to $4.1780 per pound.

Key Drivers Behind Copper’s Weakness:

1. China’s Mixed Economic Data:
   • November industrial production met expectations, but retail sales growth slowed sharply, and fixed asset investment growth lagged forecasts.
   • China, the world’s largest copper importer, has yet to unveil substantial new stimulus measures despite a recent high-level political meeting, further dampening demand sentiment.
2. Concerns Over Demand:
   • The weak Chinese economic outlook continues to weigh on copper prices, with fears of reduced industrial activity and construction investment.

The Federal Reserve’s meeting will dominate market sentiment this week, as traders look for clues about the central bank’s rate path in 2025. For gold, caution over high rates in the long term could keep prices subdued in the near future, but lingering geopolitical and economic uncertainties offer support for safe-haven demand.

For copper, the absence of significant Chinese stimulus and concerns over demand may sustain bearish pressure in the coming weeks unless clear policy actions are announced by Beijing.