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Gold prices dipped slightly in Asian trading on Monday, as a strengthening U.S. dollar and expectations of a slower pace of Federal Reserve monetary easing continued to weigh on the yellow metal. Hawkish remarks from Fed officials over the weekend added to the pressure on gold, signaling that interest rate cuts may be less aggressive than anticipated in 2025.
Gold Performance
- Spot Gold: Declined 0.1% to $2,635.81 an ounce.
- Gold Futures (Feb): Fell 0.3% to $2,646.51 an ounce by 05:12 GMT.
The decline in gold prices follows a broader downtrend that began in late December, triggered by Fed warnings of a cautious approach to interest rate cuts in the coming year.
Hawkish Fed Commentary
Fed Governor Adriana Kugler and San Francisco Fed President Mary Daly reiterated the central bank’s focus on controlling inflation, emphasizing that their fight against rising prices is far from over.
- Labor Market: Both officials noted the importance of monitoring the labor market, which remains resilient and limits the urgency for rate cuts.
- Inflation: Persistent inflation and a strong labor market outlook reduced incentives for the Fed to adopt a dovish stance.
The U.S. dollar held steady near its strongest level since November 2022, further pressuring gold prices.
Other Precious Metals
- Platinum: Futures declined 0.4% to $942.00 an ounce.
- Silver: Futures slipped marginally to $30.055 an ounce.
Industrial Metals
- Copper: March futures dropped 0.3% to $4.0655 a pound.
- China Factor: Concerns over the lack of new stimulus measures from China, the world’s largest copper importer, weighed on copper prices. Investors await upcoming Chinese inflation data for further insights.
Goldman Sachs Revises $3,000 Gold Price Forecast
Goldman Sachs adjusted its timeline for gold reaching $3,000 an ounce, now projecting the milestone by mid-2026.
- 2025 Forecast: Gold is expected to end 2025 around $2,900 an ounce.
- 2024 Review: Gold gained 27% last year, driven by:
- A 1% rate cut by the Fed in the second half of 2024.
- Strong safe-haven demand amid geopolitical tensions in the Middle East and Russia.
However, the metal faced headwinds toward the end of 2024 due to a more hawkish Fed outlook for 2025, curbing its upward momentum.
Key Focus for Traders This Week
- Nonfarm Payrolls Data: Traders will closely watch U.S. employment data for signals on the Fed’s interest rate trajectory.
- China Inflation Data: Key insights on China’s economic stability and stimulus measures will influence industrial metals like copper.
Gold’s near-term trajectory remains tied to the strength of the U.S. dollar and evolving monetary policy expectations. Despite recent setbacks, the long-term outlook for gold remains bullish, supported by safe-haven demand and potential interest rate cuts in the future.
