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Gold prices decline further ahead of U.S. data release and additional clues from the Fed.

Gold Prices Extend Losses Ahead of U.S. Data Release and Fed Speeches

Gold Prices Extend Declines

Gold prices continued to fall on Tuesday, extending the previous session’s losses. Investors remained cautious as they awaited several upcoming cues on the U.S. economy and a series of speeches from Federal Reserve officials.

Reasons for Gold’s Reversal

After gaining momentum amid the Israel-Hamas war, gold took a downturn this week due to a stronger-than-expected U.S. inflation reading. This raised concerns about higher interest rates, dampening the appeal of the yellow metal. Furthermore, the lack of immediate escalation in the war reduced the demand for safe-haven assets, while the U.S. dollar found stability near 11-month highs.

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Gold Prices and Market Performance

Gold prices experienced a 0.3% decline to $1,915.32 per ounce, while gold futures for December fell 0.3% to $1,927.85 per ounce by 00:31 ET (04:31 GMT). Both instruments exhibited a similar range of decline on Monday.

Focus on U.S. Economic Data and Fed Comments

Investors are now closely monitoring U.S. economic data and Federal Reserve comments scheduled for release later on Tuesday. Any signs of resilience, particularly in retail spending, could indicate an elevated outlook for inflation.

  • U.S. inflation data for September revealed higher-than-expected readings, intensifying concerns that the Fed will maintain a hawkish stance to combat persistent inflation.
  • This week, several Fed officials, including Chair Jerome Powell, are scheduled to speak. Powell’s comments, following the strong inflation readings, are highly anticipated as he previously hinted at prolonged higher interest rates.

Impact of Higher Interest Rates on Gold

Gold tends to underperform when interest rates rise as it increases the opportunity cost of investing in the precious metal. This trend has negatively affected gold throughout the past year, and any significant gains are expected to be limited until the Fed begins cutting interest rates.

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Copper Prices Sink as China’s GDP Comes into Focus

Copper prices reversed recent gains on Tuesday as investors await key economic readings from China.

As of now:

  • Copper prices fell 0.5% to $3.5648 per pound.
  • China’s third-quarter GDP data, to be released on Wednesday, is expected to show further deterioration in the world’s largest copper importer’s economic growth.
  • September’s data for China is also due on Wednesday and is expected to reflect continued weakness in the sector, which accounts for a significant portion of Chinese copper demand.

Despite this, copper bulls received some encouragement from Rio Tinto Ltd’s figures. The major mining company reported slightly stronger iron ore and copper shipments due to steady demand in China.

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