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Gold prices dipped on Monday as traders adjusted their expectations for U.S. interest rate cuts following stronger-than-expected nonfarm payroll data. The report boosted the dollar and raised doubts about the Federal Reserve’s willingness to ease monetary policy in the near term.
Spot gold declined by 0.9%, trading at $2,664.64 an ounce as of 08:50 ET (13:50 GMT), while February gold futures dropped 1.2% to $2,683.51 an ounce.
Rate Jitters and Inflation Data Awaited
Friday’s robust payrolls report, which indicated a strong labor market, reinforced expectations that the Fed will maintain higher interest rates for an extended period. This development has put downward pressure on gold, as higher rates increase the opportunity cost of holding non-yielding assets.
Investors are now closely watching U.S. inflation data scheduled for release on Wednesday, which could provide further insights into the Fed’s monetary policy trajectory. Recent comments from Goldman Sachs suggest that the Fed may execute only two rate cuts this year instead of three, with a higher-than-expected terminal rate for the current easing cycle.
Despite these pressures, lingering uncertainties surrounding the economic outlook under the upcoming Trump administration have kept some safe-haven demand for gold intact. The extended sell-off in risk-driven assets, especially equities, has also limited gold’s downside.
Other Precious Metals
- Platinum: Prices fell slightly to $977.05 an ounce.
- Silver: Futures experienced a sharp drop of 3.2%, settling at $30.320 an ounce.
Copper Prices Steady Amid China Stimulus Bets
Copper markets showed little movement on Monday, with benchmark futures on the London Metal Exchange slipping 0.1% to $9,075.00 an ounce. Similarly, March copper futures fell by 0.1% to $4.2997 a pound.
The red metal remains supported by strong gains from the prior week. China’s trade data revealed a 13-month high in copper imports, reaching 559,000 metric tons in December, highlighting robust demand in the world’s largest copper importer.
Investors are optimistic that Beijing will introduce further stimulus measures to bolster economic growth, especially in light of weaker domestic data and heightened trade tensions with the incoming U.S. administration.
President-elect Donald Trump’s promises to impose steep tariffs on Chinese imports from the first day of his presidency have added uncertainty to the global trade environment. This has intensified market speculation about China’s potential response, which could include ramping up domestic investment and infrastructure spending to offset external pressures.
Outlook
Gold prices remain under pressure from the Fed’s hawkish stance but could regain ground if inflation data surprises to the upside or if economic uncertainties escalate. Meanwhile, the copper market’s resilience is underpinned by China’s stimulus expectations, though trade tensions with the U.S. pose a significant risk to global demand dynamics.
