Gold prices saw little movement in Asian trading on Tuesday, with investors adopting a cautious stance ahead of a series of crucial central bank meetings this week, particularly the Federal Reserve’s decision.
The precious metal fluctuated within a narrow range of $2,600 to $2,700, as traders positioned themselves for potential changes in monetary policy, particularly focusing on the Fed, the Bank of Japan (BOJ), and the Bank of England (BOE).
Spot gold inched up by 0.1%, reaching $2,654.99 an ounce, while February gold futures also gained 0.1%, trading at $2,671.91 an ounce by 23:19 ET (04:19 GMT).
Fed’s Rate Decision in Focus
The U.S. Federal Reserve is widely anticipated to cut interest rates by 25 basis points following its two-day meeting, which concludes on Wednesday. However, markets will be paying close attention to the central bank’s forward guidance on future rate cuts, especially as growing evidence of persistent inflation and a strong labor market has led to concerns that the Fed may adopt a slower pace of rate reductions in 2024.
A more cautious stance on rate cuts has boosted the U.S. dollar in recent sessions, which has weighed on gold prices, pulling them further from recent record highs. Higher interest rates tend to pressure gold and other commodities, as they increase the opportunity cost of holding non-yielding assets like the precious metal.
BOE and BOJ to Decide on Rates
In addition to the Fed, both the BOE and the BOJ are also set to make key decisions on interest rates this week. The Bank of England is expected to cut rates in response to a weakening British economy, while analysts remain divided on whether the Bank of Japan will raise rates again after its historic policy shift earlier this year.
Other Precious Metals Show Little Movement
Other precious metals traded largely flat. Platinum futures held steady at $941.35 an ounce, while silver futures dropped by 0.3%, settling at $30.955 an ounce.
Copper Prices Under Pressure Amid China’s Economic Struggles
In the industrial metals sector, copper prices faced downward pressure, primarily due to concerns over the slowing economic growth in China, the world’s largest copper importer.
Benchmark copper futures on the London Metal Exchange fell by 0.2% to $9,052.0 per ton, while February copper futures declined 0.5% to $4.1745 per pound.
The red metal had already retreated on Monday following mixed economic data from China, which showed that the country’s economic recovery remains fragile despite several supportive measures from the Chinese government. While demand for copper in China has been resilient so far, there are growing fears of a slowdown in the coming months, potentially weakening the metal’s outlook.
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