Gold prices steady amid weak year-end trade, poised for stunning annual gains By Investing.com
Investing.com – Gold prices were largely unchanged in Asian trade on Tuesday amid weak year-end trading, though they were set for a surprise annual gain helped by this year’s U.S. central bank interest rate cuts.
it was largely unchanged at $2,607.65 an ounce, while the February expiry was down 0.2% at $2,620.22 an ounce by 00:23 ET (05:23 GMT).
Gold trading tends to have low volumes and low prices towards the end of the year as many institutional traders and market participants close their books ahead of the holidays.
Gold set for big annual winnings
The yellow metal is up more than 26% in 2024 due to the Fed’s excessive rate cuts earlier this year and geopolitical tensions around the world.
When interest rates are low, the opportunity cost of holding gold decreases compared to interest-bearing assets like bonds or savings accounts. As a result, investors tend to allocate more capital to gold as a store of value and hedge against uncertainty.
While gold prices have been rising for most of the year, the Fed’s December meeting acted as a rebound after signaling fewer rate cuts in the coming year.
Policymakers have forecast just two more interest rate cuts in 2025, against cherished expectations of four cuts as sticky inflation remains a major concern.
Gold prices fell sharply after the Fed meeting and have seen muted movements since then, reflecting a cautious outlook for next year.
With expectations of a smaller rate cut, the dollar strengthened further, putting pressure on gold.
A stronger dollar affects gold prices because it makes the yellow metal more expensive for buyers using other currencies.
Other precious metals fell slightly on Tuesday. fell 0.4% to $913.65 an ounce, while it fell 0.3% to $29.315 an ounce.
Copper is subdued even as Chinese factory activity expands
Among industrial metals, copper prices were subdued due to a strong dollar.
It was slightly weaker in Asian trade on Tuesday, but remained close to the two-year high it hit earlier this month.
Data released on Tuesday showed China grew for a third straight month in December as a raft of new stimulus measures continued to provide support.
However, growth was somewhat lower than market expectations and below the previous month’s reading.
The London Metal Exchange benchmark fell 0.2% to $8,925.50 a tonne, while February was largely unchanged at $4.0885 a pound.
