Gold Prices Recoup Losses

Gold prices rose in Asian trade on Wednesday, recovering some recent losses as a rally in the dollar paused ahead of key inflation data that may impact interest rates.

The yellow metal had sharply declined from record highs in the past weeks following Donald Trump’s election victory, which initiated a major risk-on rally in global financial markets. Spot gold hit a near two-month low on Tuesday.

Spot gold increased by 0.5% to $2,609.90 an ounce, while December gold futures fell by 0.4% to $2,615.70 an ounce by 23:16 ET (04:16 GMT).

Focus on CPI Data

Gold appeared to steady as attention shifted to approaching consumer price index inflation data, providing more insight into interest rate trends.

The expected reading may indicate persistent inflation in October, which poses challenges for sustained monetary easing from the Federal Reserve. Trump’s election win adds to the uncertainty surrounding the inflation outlook, as the president-elect is anticipated to introduce more expansionary policies during his second term, increasing expectations for inflation and interest rates.

Other precious metals also saw gains on Wednesday, with platinum futures rising by 0.7% to $960.10 an ounce, and silver futures increasing by 1.1% to $31.108 an ounce.

Rate Anxiety After Fed Warning

Concerns over interest rates were heightened by a warning from Minneapolis Fed President Neel Kashkari, stating that inflation increases could prompt the Fed to halt its rate cuts.

The central bank has lowered interest rates by a total of 75 basis points in the past two months and is expected to cut rates by 25 basis points in December. Following Kashkari’s comments, traders slightly reduced expectations for a December cut, as indicated by the CME Fedwatch.

Several more Fed officials are scheduled to speak this week, including Chair Jerome Powell on Thursday.

Copper Prices Decline

In the realm of industrial metals, copper prices decreased slightly on Wednesday, including significant losses from previous sessions, as new fiscal measures from China produced a lackluster response.

Benchmark copper futures on the London Metal Exchange dropped by 0.1% to $9,137.50 a ton, while December copper futures fell by 0.2% to $4.1390 a pound.

China approved a 10 trillion yuan ($1.4 trillion) debt package aimed at supporting local governments, yet traders were disillusioned by the absence of targeted measures supporting consumption and the property sector. Analysts suggest Beijing may be waiting for more clarity on a Trump presidency's implications for China before launching additional fiscal initiatives, especially given Trump's commitment to imposing steep import tariffs on the country.