Gold Prices:
Gold prices saw an uptick on Tuesday, following a slight weakness in the U.S. dollar as traders awaited crucial economic data later in the week. The dollar’s mild retreat offered support to gold, but gains remained restrained due to expectations of prolonged higher U.S. interest rates. Investors are awaiting key U.S. economic indicators to gain further insight into the economic outlook. Reports of escalating geopolitical tensions in the Middle East also contributed to safe-haven buying. Spot gold rose by 0.4% to $2,029.53 per ounce, while gold futures for February increased by 0.4% to $2,030.70 per ounce.
U.S. Economic Data and Fed Policy:
Traders are focusing on upcoming U.S. economic data, particularly the fourth-quarter GDP data scheduled for Thursday, which is anticipated to show a moderation in overall growth. Resilience in the U.S. economy could provide the Federal Reserve with more leeway to maintain higher interest rates for an extended period. The Fed is expected to keep rates at 23-year highs during its next meeting. In addition, the Personal Consumption Expenditures (PCE) price index data, the Fed’s preferred inflation gauge, is expected to reinforce that inflation remained persistent in December. The waning expectation of a March rate cut has influenced gold prices, as higher rates increase the opportunity cost of holding non-yielding assets like gold.
Copper Prices:
Copper prices surged nearly 1% as reports circulated that the Chinese government was preparing additional measures to support local markets. China, the largest copper importer globally, holds a significant impact on copper prices, and signs of further support for its economy bolstered optimism. Copper futures for March rose to $3.7823, recovering a substantial portion of losses incurred earlier in the year. The recovery was driven by broader optimism following news that Beijing was considering a substantial support package of 2 trillion yuan ($278 billion) for mainland stocks, indicating potential strength in Chinese demand for copper.