Gold prices steady ahead of Trump inauguration; volatility likely

Investing.com– Gold prices steadied Monday as traders cautiously awaited US President-elect Donald Trump’s inauguration speech, anticipating insights into his administration’s policies and potential signals on future interest rates.

At 07:40 ET (12:40 GMT), Spot Gold rose 0.3% to $2,708.70 per ounce, while Gold Futures expiring in February slipped slightly to $2,748.19 an ounce. Traders brace for volatility with incoming Trump administration

Gold traders are bracing for increased volatility as Trump begins his second term, with his anticipated policy announcements expected to influence market dynamics. 

The precious metal, traditionally viewed as a safe-haven asset, has seen prices stabilize near a one-month peak, bolstered by subdued US inflation data that raises expectations for further Federal Reserve rate cuts. 

Market sentiment is currently shaped by the interplay between potential US policy shifts and the Federal Reserve's monetary stance. Analysts suggest that a forceful start to Trump's term could further support the dollar, whereas a gradual approach might weaken it, thereby affecting gold prices. 

The US Dollar Index was 0.3% weaker on Monday, providing support to the yellow metal.

A weaker dollar typically drives gold prices higher because it makes the metal cheaper for buyers using other currencies.

Additionally, recent data indicating easing price pressures has led investors to anticipate a more accommodative monetary policy, which traditionally supports gold prices.

Despite these factors, gold's gains have been tempered by geopolitical developments, such as the ceasefire agreement between Israel and Hamas, which can influence safe-haven demand.

As the market navigates these complexities, traders remain vigilant, closely monitoring Trump’s moves to assess their impact on gold's trajectory.

Other precious metals were largely subdued. Platinum Futures were down 0.3% to $962.70 an ounce, while Silver Futures fell 0.3% to $31.062 an ounce. Copper subdued as trade tariff concerns weigh

Among industrial metals, copper prices were subdued as a combination of anticipated US tariffs, prospects of a stronger dollar, and investor caution ahead of Trump's inauguration, weighed on the red metal.

.While China's increased imports and declining inventory levels have provided some support to copper prices, traders remain wary.

During periods of escalating tariffs and trade tensions, such as in mid-2018 and mid-2019, copper prices declined sharply as investors anticipated reduced demand from China, the world's largest copper consumer.

Benchmark Copper Futures  on the London Metal Exchange inched 0.3% lower to $9,165.00 a ton, while February Copper Futures  also ticked 0.3% lower to $4.3540 a pound.

(Peter Nurse contributed to this article.)

Source: Investing.com