Gold prices race to near 7-mth high on dovish Fed speak

Investing.com-- Gold prices rose in Asian trade on Wednesday, reaching a near seven-month high as a string of dovish signals from Federal Reserve officials ramped up bets on an early pivot by the central bank. 

A drop in the dollar- to near four-month lows, benefited the yellow metal, as did retreating U.S. Treasury yields. The 10-year rate fell to a two-month low in Asian trade.

Caution before a string of key economic readings this week- from the U.S. and China- also kept safe haven demand for gold upbeat, especially as a several weak readings from Japan and the euro zone fed concerns over a global economic slowdown. 

Spot gold rose 0.1% to $2,044.08 an ounce, while gold futures expiring in December rose 0.2% to $2,044.20 an ounce by 23:27 ET (04:37 GMT). Spot prices were now about $30 away from a record high touched earlier this year. 

Gold underpinned by Fed pivot bets, set for bumper November

Fed officials said in separate overnight comments that the bank needed to be more cautious in keeping rates higher for longer, and that easing inflation may spur the bank into loosening policy earlier than expected.

Fed Governor and noted hawk Christopher Waller said that high rates had quashed inflation sufficiently this year, and that a further decline in price pressures will likely see the bank begin cutting interest rates. 

His comments saw traders pricing in an at least 40% chance that the Fed will cut rates by as soon as March 2024, and that the central bank will keep rates on hold in December. Waller and other Fed officials have just this week to offer more cues on monetary policy, before the blackout period ahead of the Fed’s mid-December meeting. Chairman Jerome Powell is also set to speak later this week. 

The prospect of a shift in the Fed’s hawkish stance spurred strong gains in gold through November, with the yellow metal now set to add over 3% for the month. Any potential rate cuts by the Fed are likely to benefit gold markets, given that higher rates push up the opportunity cost of investing in the yellow metal. 

Tony Sycamore, analyst at IG Markets called the trend a “perfect environment for gold” in an interview with Ausbiz.

Copper upbeat as supply disruptions help ease China jitters 

Among industrial metals, copper prices were flat on Wednesday as supply disruptions in Peru and Panama helped ease uncertainty before key Chinese economic data this week.

Copper futures expiring in March were flat at $3.8460 a pound after rallying 1.5% so far this week. Weakness in the dollar also aided copper prices. 

A copper mine operated by Canadian miner First Quantum (NASDAQ:QMCO) was ordered to shut down by the Panama government on the grounds that its contract was unconstitutional. This also coincided with a planned strike at MMG Ltd’s Las Bambas copper mine in Peru.

The output disruptions pointed to tighter copper markets in the coming months- a trend that could support prices of the red metal. 

But markets remained largely on edge before key purchasing managers index data from China, which is expected to show a continued decline in manufacturing activity in the world’s largest copper importer.