Gold prices in Asia remained relatively unchanged after dropping below critical levels earlier this week due to a strong rebound in the US dollar. With investors now eagerly awaiting key US labor market data, the future of 2024 interest rate cuts is uncertain. Gold had been losing ground throughout the week following a strong performance at the end of 2023. However, the rally was short-lived due to profit-taking and growing uncertainty about the Federal Reserve’s intentions for interest rates this year, having recently released meeting notes that were light on details regarding rate cuts.
As markets eagerly await labor market data, traders are uncertain whether the significantly cooler labor market and weaker inflation will be enough to prompt aggressive monetary easing by the Fed. Despite bets on a 25 basis point rate cut in March 2024 decreasing to 62%, the dollar has seen sharp gains, contributing to declines in the price of gold. Nonetheless, gold has remained above the $2,000 an ounce mark for over a month, with bullish prices expected to benefit from easing interest rates this year.
In terms of industrial metals, copper prices have been on the decline due to a bout of profit-taking after a strong finish in 2023. The sustained downturn in several major economies’ manufacturing activity, as shown by weak Purchasing Managers Index readings, has been a significant factor contributing to the decline. Concerns about a slowdown in copper demand have been amplified by China’s manufacturing sector falling further into contraction in December, given that China is the world’s largest copper importer.
