Investing.com– Gold prices experienced a slight decline in Asian trade on Monday, following a drop from record highs due to strong U.S. payrolls data. The surge in the dollar and U.S. Treasury yields, prompted by the robust payrolls data, led traders to reduce their expectations of a 50 basis point interest rate cut by the Federal Reserve.
Gold prices under pressure from lesser rate cut expectations
As a result of the strong payrolls data, the yellow metal fell 0.2% to $2,647.64 an ounce, while gold futures for December delivery also experienced a slight drop to $2,667.10 an ounce. The pushback on reducing interest rates further was reinforced by the market’s reaction to an imminent 25 bps rate cut by the Fed in the upcoming November meeting. Traders were heavily favoring this outcome, with over a 90% chance being priced in for such a scenario.
Additional insight: The focus on signals from the Fed and the U.S. economy this week will play a crucial role in determining future interest rate decisions and subsequently affect gold prices.
Addressing by a series of Fed officials and the minutes of the Fed’s September meeting are expected to provide more clarity on the interest rate trajectory. Moreover, inflation data to be released later in the week will also influence rate expectations.
Other precious metals also followed the decline in gold prices, with silver falling 0.5% to $997.05 an ounce and platinum dropping 0.1% to $32.360 an ounce.
Copper holds steady amidst Chinese stimulus speculation
Meanwhile, among industrial metals, copper prices stabilized on Monday, after experiencing erratic movements over the past week. Despite the fluctuations, copper prices remained relatively positive as China, the top importer, is expected to introduce more stimulus measures.
Benchmark copper on the London Metal Exchange held steady at $9,972.0 a ton, while one-month copper futures rose 0.2% to $4.5728 a pound. The initial optimism surrounding copper was fueled by China’s announcement of additional stimulus measures in late-September. However, trading volumes for the metal dwindled during the week-long Chinese Golden Week holiday period.
Looking ahead, as Chinese markets reopen and the government is expected to unveil more stimulus measures, copper prices may experience further movements based on the developments in China’s economic stimulus plans.
