Investing.com– Gold prices moved little in Asian trade on Wednesday, retaining most of their losses from the prior week as investors questioned bets on early interest rate cuts by the Federal Reserve.
Focus was largely on upcoming U.S. consumer price index data, which could indicate U.S. inflation remained sticky in December.
Gold was nursing steep losses over the past week as traders steadily scaled back bets that the Fed could begin trimming interest rates by as soon as March 2024. This notion triggered sharp gains in the , which also weighed on bullion prices.
Still, the yellow metal managed to hold above the coveted $2,000 an ounce level, after handily crossing the level in early-December. Gold prices were also up about 10% for 2023.
steadied at $2,029.30 an ounce, while expiring February steadied at $2,034.65 an ounce by 00:28 ET (05:28 GMT).
US CPI data in focus for more rate-cut cues
due on Thursday is expected to show inflation grew slightly in December. Sticky inflation, coupled with recent signs of resilience in the labor market, give the Fed more headroom to keep rates higher for longer.
Traders were seen steadily cutting bets that the Fed could begin trimming rates by as soon as March 2024. The showed bets on a 25 basis point rate cut in March at a 63.6% chance, down from a 69.6% chance seen a week ago.
Fed officials were also seen pushing back against expectations for early rate cuts, with Atlanta Fed President Ralph Bostic stating that he remained biased towards monetary policy remaining tight in the near-term.
While the Fed has signaled it will eventually cut rates in 2024, it has provided scant information on the timing of the cuts. The central bank has so far maintained a largely data-driven approach to trimming interest rates.
Higher rates push up the opportunity cost of investing in gold, which offers no yield. This trade had pressured the yellow metal over the past two years, with steady gains in gold only coming on expectations of lower rates in 2024.
Copper sinks on weak economic outlook
Among industrial metals, copper prices rose slightly on Wednesday after falling sharply over the past week, amid growing concerns over a demand slowdown this year.
expiring in March rose 0.3% to $3.7717 a pound, but were trading down more than 2% so far in 2024.
A swathe of weak economic readings from across the globe battered copper prices, with weak readings from top importer China acting as a major point of contention. Markets fear that slowing economic activity will chip away at copper demand this year, especially as the effects of high interest rates are baked into the economy.
Focus is now on Chinese and readings due on Friday, for more cues on the world’s largest copper importer.
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