Gold prices rose on Tuesday, tracking the slight weakness in the dollar as traders pulled back ahead of a series of key U.S. economic readings this week, even though the likelihood of a long-term increase in U.S. interest rates still keeps gains subdued.
Among industrial metals, copper prices rose by 1% amid reports suggesting that the Chinese government is preparing for further measures to support local markets. China is the world’s largest importer of copper and has been a major pain point for copper prices.
Traders are now looking for more signals about the U.S. economy, as bets on the Federal Reserve starting to cut interest rates by March 2024 have diminished. This idea had a significant impact on gold earlier in January, pushing the prices of the yellow metal to its lowest level since 2000 dollars per ounce. However, gold has rebounded from its lowest levels in 2024, as geopolitical tensions in the Middle East stimulated safe-haven buying. Prices of the precious metal also received support from bets that the Federal Reserve will eventually ease monetary policy later this year.
The focus is now directly on the U.S. Gross Domestic Product (GDP) data for the fourth quarter, scheduled for release on Thursday, which is expected to show some slowdown in overall growth. However, any signs of resilience in the U.S. economy are likely to give the Federal Reserve more room to keep interest rates higher for a longer period. It is widely expected that the central bank will keep interest rates at their highest levels in 23 years when it meets next week.
Inflation signals in the United States and the strength of the job market, along with the stern warnings from Federal Reserve officials, have significantly deterred traders from their bets on a rate cut in March. Part of this reversal caused severe losses in gold prices earlier in January.
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Shady Fouad is a technical analyst at LDN Company
Shady's strategic vision in the currency markets is reinforced by more than fifteen years of trading experience, which enables him to blend economic and technical analyzes with high efficiency, and find the best investment ideas for traders.
