Gold Prices Steady as Federal Reserve Signals

Gold prices moved little in Asian trade on Tuesday, steadying after falling from record highs as traders priced in the prospect of smaller interest rate cuts by the Federal Reserve.

Industrial Metals

Among industrial metals, copper prices fell sharply as Chinese markets reopened from a week-long holiday, while Beijing's plans to implement recently announced stimulus measures underwhelmed.

Focus this week was on more cues from the Fed, as well as key inflation data that is likely to factor into the outlook for rates.

Gold prices had surged to record highs in September after the Fed cut rates by 50 basis points and launched an easing cycle. However, doubts over the central bank’s future pace of rate cuts saw the yellow metal retreat.

Strength in the dollar, which hit seven-week highs in recent sessions, also weighed on metal markets.

Spot gold steadied at $2,642.86 an ounce, while gold futures expiring in December fell 0.2% to $2,661.70 an ounce.

Gold’s Decline

Gold prices have decreased from record highs over the past week, with focus now turning to more cues on interest rates.

Much of gold’s losses came after stronger-than-expected nonfarm payrolls data on Friday led traders to drastically scale back expectations for future rate cuts.

Traders were pricing in an 81% chance for a 25 basis points cut in November and a 19% chance for no changes to interest rates, according to CME Fedwatch.

Focus this week was on the minutes of the Fed’s September meeting for more insight into its outlook on future rate cuts, given that the bank largely forecast a data-driven approach.

Consumer price index data due later this week is set to provide more cues on inflation while also factoring into the Fed’s outlook.

While lower interest rates bode well for metal markets, a slower pace of cuts makes non-yielding assets appear less attractive in the near term.

Other precious metal prices also fell on Tuesday. Platinum futures fell 0.8% to $977.50 an ounce, while silver futures fell 1.1% to $31.660 an ounce.

Copper Prices Slide

Among industrial metals, copper prices fell sharply on Tuesday as mainland Chinese markets opened after a week-long holiday.

Benchmark copper futures on the London Metal Exchange fell 1.5% to $9,800.50 a ton, while one-month copper futures fell 1.9% to $4.4697 a pound.

Copper had initially benefited from optimism over China after Beijing announced a slew of major stimulus measures in late September. As the world's largest importer of copper, this boost ran out of steam by Tuesday, especially as the Chinese government provided underwhelming plans on how it intends to implement the stimulus measures.