Gold prices rise after US inflation data; Citi cuts copper forecast

Gold prices rose Wednesday, helped by a small fall in the dollar after US inflation data kept alive the chance of another interest rate by the Federal Reserve this year. 

At 09:15 ET (14:15 GMT), spot gold rose 0.5% to $2,612.35 an ounce, while gold futures gained 0.5% to $2,618.80 an ounce.  Gold rebounds after CPI release

Data released earlier Wednesday showed that headline US inflation accelerated slightly as expected in October, keeping alive the prospect for another rate cut by the US central bank when it next meets in December.

The consumer price index , a key gauge of price growth in the world's largest economy, rose by 2.6% on an annualized basis last month, compared to 2.4% in September. Month-on-month, the figure  moved up by 0.2%, matching September's pace.

Meanwhile, the so-called "core" measure, which strips away more volatile items like food and fuel, increased by 3.3% year-over-year  and 0.3% on a monthly basis. Both equalled the metric logged in September.

These numbers have seen the dollar index slip 0.2%, making commodities denominated in the US currency, like gold, cheaper for foreign buyers.

Uncertainty over interest rates had been exacerbated by a warning from Minneapolis Fed President Neel Kashkari on Tuesday, who said that any increases in inflation could see the Fed pause its rate cutting spree.

Several more Fed officials are set to speak this week, most notably Chair Jerome Powell on Thursday. 

The central bank has cut interest rates by a total 75 basis points in the past two months, and is expected to cut rates by 25 bps in December.

Donald Trump’s election victory has also added to worries about inflation, as the president-elect is widely expected to roll out more expansionary policies during his second term, presenting a heightened outlook for inflation and interest rates. 

Broader precious metals also rose on Wednesday, recouping some recent losses. Platinum futures rose 0.4% to $951.80 an ounce, while silver futures rose 1.2% to $31.125 an ounce.  Copper nurses China losses

Among industrial metals, copper prices fell slightly on Wednesday, and were nursing sharp losses in recent sessions as new fiscal measures from top importer China largely underwhelmed.

Benchmark copper futures on the London Metal Exchange fell 0.5% to $9,099.00 a ton, while December copper futures fell 0.5% to $4.1178 a pound. 

China approved a 10 trillion yuan ($1.4 trillion) debt package to support local governments. But traders were disheartened by a lack of targeted measures to support consumption and the property market. 

Analysts said Beijing was likely seeking more clarity on what a Trump presidency will entail for the country, before approving more fiscal measures. Trump has vowed to impose steep import tariffs on China. Citi cuts copper price forecast

Citi Research has revised down its copper price forecast for the short term, signaling that ongoing trade tensions between the United States and China, coupled with weaker-than-expected economic growth in China, are likely to dampen global demand for copper. 

This reassessment, in a note released released earlier Wednesday, projects copper prices falling to $8,500 per metric ton in the near term, down from an earlier forecast of $9,500 per metric ton, with an average price of $9,000 per metric ton for the fourth quarter of 2024.

The outlook reflects Citi’s concerns over the resilience of global manufacturing demand, a critical driver for copper consumption. 

(Ambar Warrick contributed to this article.)

 

Source: Investing.com