Gold prices steady but head for worst week since 2021 as rate cut bets recede

Gold prices steadied in Asian trade on Friday, but were nursing their worst weekly performance in over three years as strong U.S. inflation and less dovish signals from the Federal Reserve sparked doubts over lower interest rates.

The yellow metal was also battered by a risk-on rally in the wake of a Donald Trump victory in the 2024 presidential election. Markets were also uncertain over the outlook for interest rates under Trump. 

Spot gold rose 0.2% to $2,569.47 an ounce, while gold futures expiring in December rose 0.1% to $2,574.05 an ounce by 23:40 ET (04:40 GMT).  Gold set to lose over 4% this week 

Spot gold was trading down about 4.3% this week, its worst performance since  June 2021. The yellow metal had initially tumbled from record highs after Trump’s election victory ramped up risk appetite last week.

Losses deepened this week as the dollar shot up to one-year highs amid increasing uncertainty over the near-term outlook for interest rates.

U.S. consumer and producer inflation read sticky for October, while comments from Federal Reserve officials suggested the central bank was more cautious over cutting interest rates further. 

Fed Chair Jerome Powell said resilience in the U.S. economy meant the central bank could take its time to cut rates further. His comments saw traders pare expectations for a December rate cut.

Traders were seen pricing in a 61% chance for a 25 basis point rate cut in December, down from an 85.7% chance seen on Thursday. Traders also saw a 39% chance rates will remain unchanged, CME Fedwatch showed. 

The prospect of higher-for-longer rates bodes poorly for gold and other precious metals. Expectations of more inflationary policies under Trump also saw traders bracing for higher long term rates.

Platinum futures rose 0.3% to $946.70 an ounce, while silver futures rose 0.1% to $30.610 an ounce on Friday. Both metals were also nursing steep losses this week.  Copper prices rise after China data, but nurse steep weekly loss

Among industrial metals, copper prices rose following some mixed economic readings from top importer China. But prices of the red metal were nursing steep losses for the week after stimulus measures from the country largely underwhelmed.

Benchmark copper futures on the London Metal Exchange rose 0.3% to $9,056.50 a ton, while December copper futures rose 0.5% to $4.0968 a pound. Both contracts were down between 4% and 5% this week, their worst drop since early-July. 

Data on Friday showed little improvement in the Chinese economy, as industrial production grew less than expected in October, as did fixed asset investment .

But retail sales were a bright spot, rising more than expected on the Golden Week holiday. 

Source: Investing.com