Investing.com– Gold prices moved little on Wednesday but saw some relief as the dollar eased from three-month highs, although waning bets on early U.S. interest rate cuts kept the outlook for the yellow metal uncertain.
Bullion prices were battered by bets on higher-for-longer interest rates, especially following a slew of strong U.S. economic readings and hawkish comments from Federal Reserve officials.
The and U.S. Treasury yields had surged on these signals. While the dollar fell slightly from three-month highs on Wednesday, the greenback was still sitting on strong gains so far in 2024.
A higher outlook for U.S. interest rates bodes poorly for gold, given that high rates increase the opportunity cost of investing in bullion. This trade had limited any major upside in gold over the past two years.
steadied at $2,035.12 an ounce, while expiring in April were flat at $2,050.95 an ounce by 00:25 ET (05:25 GMT).
Gold rangebound amid dearth of cues, but stays above key support level
Markets were now awaiting more cues on the U.S. economy to guide price movements in gold. , due next week, is expected to offer some direction.
While analysts had forecast that increasing anxiety over interest rates would spur more near-term losses in gold, the yellow metal still traded well above the $2,000 an ounce support, which analysts said could be tested this week.
Still, with markets beginning to steadily price out interest rate cuts in March and May, the outlook for gold remains uncertain. Safe haven demand for the yellow metal may also be diminished by a potential ceasefire between Israel and Hamas.
Gold is expected to benefit from an eventual reduction in interest rates. But an increasing number of signs suggest that such a scenario will play out later, rather than earlier in 2024.
Copper edges lower before more China cues
Among industrial metals, copper prices fell slightly on Wednesday in anticipation of more economic cues from top importer China.
expiring in March fell 0.2% to $3.7772 a pound. The red metal was nursing steep losses over the past week following a string of underwhelming purchasing managers index readings from China.
, due on Thursday, is expected to offer more cues on the world’s largest copper importer. Concerns over slowing Chinese demand have been a key weight on copper prices, especially as a post-COVID economic rebound largely failed to materialize.