Gold prices rangebound as markets gauge 2024 rate cut bets

Investing.com-- Gold prices moved little in Asian trade on Thursday, sticking to a trading range established over the past week as markets speculated over just when the Federal Reserve will begin trimming interest rates.

The yellow metal stuck to a range between $2,000 and $2,050 an ounce seen over the past week. While dovish signals from the Fed helped the metal break above the $2,000 an ounce level, it struggled to make further gains as risk appetite improved and as traders second guessed expectations for early rate cuts from the Fed.

Several Fed officials also warned that bets on an early rate cut from the central bank were overly optimistic, given that inflation is still trending well above the Fed’s 2% annual target.

Their comments enabled the dollar to recover from near five-month lows this week, and kept a lid on any major gains in gold.

Spot gold rose 0.3% to$2,036.89 an ounce, while gold futures expiring February were flat at $2,048.65 an ounce by 00:34 ET (05:34 GMT).

March rate cut bets persist, more inflation data on tap

But despite recent pushback from Fed officials, Fed Fund futures prices showed traders pricing in an over 70% chance of a 25 basis point rate cut in March 2024.

Markets were also looking to a slew of economic readings due this week, with a revised reading on third-quarter GDP due later in the day. Strength in the U.S. economy gives the Fed more headroom to keep rates higher for longer.

Weekly jobless claims data is also due on Thursday, while a reading on the PCE price index- the Fed’s preferred inflation gauge- is due on Friday. Inflation and labor market strength is a key point of contention for the Fed, with both sectors having shown surprising resilience in recent months.

Still, any signs of cooling in the economy is likely to drive down the dollar and push up gold. The yellow metal stands to benefit from a lower interest rate environment, given that high rates push up the opportunity cost of investing in the yellow metal.

Copper prices near 4-mth high on China hopes, tighter supplies

Among industrial metals, copper prices hovered around a four-month high on Thursday, after weakness in the dollar and hopes for more stimulus measures in China spurred strong gains in the red metal.

Copper futures expiring March steadied at $3.9078 a pound, sticking close to highs last seen in early-August.

China’s central bank kept its benchmark loan prime rate at record lows this week, keeping monetary conditions loose as it attempts to shore up economic growth. Copper demand in the country has remained robust despite worsening economic conditions, and is expected to improve in the coming months as Beijing rolls out more stimulus.

Copper markets are also expected to tighten in 2024, amid increasing demand and as major mine closures in Panama and Peru limit supplies.

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