Gold Prices Rise in Asian Trade

Gold prices were higher in Asian trade on Thursday due to a slightly weaker dollar as markets resumed trading after the Christmas holiday. However, gains were limited as investors remained cautious following the U.S. Federal Reserve’s hawkish stance.

Traders were hesitant to place large bets during this holiday-shortened week, resulting in thin trading volumes.

Spot Gold rose 0.4% to $2,627.55 per ounce, while gold futures for February ticked up 0.1% to $2,643.86 an ounce by 00:00 ET (05:00 GMT).

Geopolitical tensions in the Middle East also contributed to the gains in bullion. The Palestinian militant group Hamas and Israel accused each other of hindering a ceasefire deal, with Hamas blaming Israel for imposing additional conditions and Israeli Prime Minister Benjamin Netanyahu alleging that Hamas reneged on prior agreements.

Gold is generally perceived as a safe-haven asset amid market uncertainties.

US Dollar Weakens but Remains Near 2-Year High

The dollar index was slightly lower in Asian trade but remained near a two-year high reached last week. The Fed’s hawkish shift has reignited strength in the dollar since higher interest rates make the currency more attractive due to increased returns on dollar-denominated assets.

A stronger dollar typically puts downward pressure on gold prices, as it becomes more expensive for buyers utilizing other currencies. Gold prices fell sharply following last week’s Fed policy meeting, which indicated that rates will remain elevated for a more extended period.

Higher interest rates increase the opportunity cost of holding gold, making interest-bearing assets like bonds more appealing. The yellow metal has seen marginal movements this week, after losing more than 1% last week, reflecting uncertainty about its outlook.

Other precious metals were mostly steady on Thursday, with platinum futures unchanged at $960.20 per ounce, while silver futures remained muted at $30.273 per ounce.

Copper Edges Up on China Stimulus; Strong Dollar Caps Gains

In the industrial metals sector, copper prices rose slightly after a Reuters report indicated that Chinese authorities plan to issue a record-breaking 3 trillion yuan ($411 billion) in special treasury bonds next year as part of an intensified fiscal effort to stimulate a struggling economy.

However, copper struggled to capitalize on this news due to a strong dollar weighing on its gains. Analysts also noted seasonal sluggishness, as industrial production and construction projects often slow down as businesses prepare for year-end closures and holidays.

The most-traded January copper contract on the Shanghai Futures Exchange rose 0.2% to 74,220 yuan per ton. Benchmark copper contracts on the London Metal Exchange were closed on Thursday for the holiday.