Investing.com-- Gold prices fell in Asian trade on Monday as traders braced for a slower pace of U.S. interest rate cuts following stronger-than-expected nonfarm payrolls data, which supported the dollar.
Among industrial metals, copper prices took limited support from data showing China’s copper imports hit a 13-month high in December. Sentiment towards China was dimmed by anticipation of more U.S. trade tariffs against the country.
Uncertainty over the economic outlook under incoming President Donald Trump still kept some safe haven demand for gold in play, as did an extended sell-off in broader risk-driven assets, particularly stocks. This limited overall losses in the yellow metal.
Spot gold fell 0.1% to $2,686.32 an ounce, while gold futures expiring in February steadied at $2,714.41 an ounce by 23:49 ET (04:49 GMT).
Gold pressured by increased rate jitters; inflation data awaited
Gold prices were pressured chiefly by the prospect of U.S. rates remaining higher for longer, as Friday’s payrolls data saw traders further scale back bets on rate cuts this year.
Focus is now on upcoming U.S. inflation data, due on Wednesday, for more cues on the Fed’s rate outlook. The central bank signaled that sticky inflation and strength in the labor market will give it more impetus to keep rates high.
Goldman Sachs analysts said in a recent note that they now expect the Fed to cut rates only twice this year, compared to prior expectations of three cuts. The central bank’s terminal rate is also expected to be higher in this easing cycle.
Higher rates pressure metal markets by increasing the opportunity cost of investing in non-yielding assets. Among other precious metals, platinum futures fell slightly to $991.45 an ounce, while silver futures fell 0.4% to $31.205 an ounce on Monday.
Copper prices flat as markets weigh China outlook
Benchmark copper futures on the London Metal Exchange rose 0.3% to $9,111.00 an ounce, while March copper futures rose 0.1% to $4.2960 a pound.
The red metal was sitting on strong gains from the prior week, as soft Chinese economic data spurred increased bets that Beijing will unlock even more stimulus to shore up growth.
Trade data on Monday showed that China’s copper imports hit a 13-month high at 559,000 metric tons in December, indicating that demand remained robust in the world’s biggest copper importer.
Copper bulls are betting that Beijing will dole out even more stimulus in the coming months, especially in the face of steep import tariffs under Trump.
Trump- who will take office on January 20- has vowed to impose steep trade tariffs on China from “day one” of his Presidency.