2024-02-14 16:21:32
© Reuters.
Investing.com – Gold prices fell below key support levels in Asian markets today. After reporting stronger-than-expected inflation in January This has fueled growing concern that the Federal Reserve will keep interest rates higher for longer.
Gold lost further following spot prices fell below support at $2,000 an ounce. That was closely watched on Tuesday. Analysts have warned of further declines following the loss of key support levels.
Traders also lowered their bets on an early Fed rate cut. This leaves gold with little chance of recovering in the short term. It surged to a three-month high following Tuesday’s report. which continues to put pressure on gold
Indexes due in April edged down slightly to $1,992.64 an ounce, while those due in April were down 0.1% to $2,005.05 an ounce as of 00:06 ET (05:06 GMT). Both indexes lost more than 1% on Tuesday.
Spot gold prices fell below $2,000 an ounce for the first time since mid-December.
James Stanley, senior strategist at FOREX.com, said $1,975 to $1,978 an ounce is likely the next support level for gold. This is because it was the last support level gold saw ahead of the December Fed meeting.
Tight inflation pressures interest rate bets in May and June, gold outlook uncertain.
Tuesday’s inflation data (CPI) showed that U.S. inflation expanded more than expected in January. That confirms recent warnings from the Fed that sticky inflation will prevent the bank from cutting interest rates.
It shows traders lowering their bets on interest rate cuts in May and June. Traders, though, are still betting that there is a 51% chance of a 25 basis point rate cut in June.
Still, the prospect of higher interest rates for a longer period is a bad thing for gold. This is because higher interest rates drive up the opportunity cost of investing in gold. This trend has limited the increase in gold prices over the past two years.
Gold made limited progress as prices rose above $2,050 an ounce in the latest session. This is despite an increase of regarding 10% in 2003.
Copper prices head to 3-month low amid dollar pressure
Among industrial metals Copper prices posted further losses today. and returned to its lowest level in 3 months due to the strengthening of the dollar. and the trend of economic growth slowing down
Due in March, it was down 0.5% to $3.6922 per pound. and is trading close to its weakest level since mid-November.
The prospect of a prolonged period of higher interest rates also weighs on concerns regarding slowing copper demand. This is because economic activity tends to cool in a high interest rate environment.
Copper prices remain shaky following the discovery of large copper veins in Zambia. This is expected to eventually increase global supply. But this ore line is expected to take a long time to turn into a full-capacity mine.
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