Gold prices hover below $2,000; US PMIs awaited

Investing.com-- Gold prices hovered just below key highs on Friday as a U.S. market holiday made for scant trading cues, with focus now turning to upcoming business activity readings for more cues on the world’s largest economy. 

The yellow metal was still headed for a second straight week of gains, amid growing conviction that the Federal Reserve was done raising interest rates. It also remained in sight of the coveted $2000 an ounce level, which it had breached earlier in the week.

But gold failed to hold the level after strong labor market data and hawkish signals from the Fed spurred doubts over when the central bank planned to begin trimming rates.

Spot gold rose 0.1% to $1,993.75 an ounce, while gold futures expiring in December rose 0.1% to $1,994.70 an ounce by 00:00 ET (05:00 GMT). Both instruments were set to add between 0.5% and 0.7% this week.

A muted overnight session in the dollar index, on account of the U.S. Thanksgiving holiday, also provided few cues to gold. 

Gold saw sharp gains earlier in November as markets bet that the Fed will raise interest rates no further. But given that the central bank still reiterated its higher-for-longer outlook on rates, future gains in the yellow metal remained in doubt. 

US PMIs awaited for more economic cues 

Markets were now awaiting U.S. purchasing managers index data, due later in the day. The readings are expected to show sustained weakness in business activity, as the world’s largest economy cools under high interest rates and sticky inflation.

Any signs of weakness in the U.S. economy gives the Fed limited headroom to keep rates higher, and also increases the chances of an early rate cut.

Weak PMI readings from the euro zone and Japan also pointed to weakening economic trends across the globe, which in turn could support safe haven demand for gold. 

But the outlook for the yellow metal still remains uncertain, given that most global central banks have signaled they will keep rates higher for longer. Rising rates push up the opportunity cost of investing in bullion.

Still, the yellow metal was trading up around 10% for the year, having benefited from some safe haven demand. 

Copper prices set for weekly gain amid China stimulus hopes, tighter markets 

Among industrial metals, copper prices moved little on Friday, but were set for a second positive week following positive cues on Chinese demand and expectations of tighter markets.

Copper futures expiring in December steadied at $3.7732 a pound, and were up 1% this week, extending a 4.1% jump from the prior week.

China- the world’s largest copper importer- was seen preparing more stimulus measures for its property sector, which is a key driver of copper demand in the country. The move pushed up hopes that the sector will avoid a broader meltdown and help spur copper demand in the coming months.

On the supply front, major mine stoppages in Panama and Peru also heralded tighter markets.