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Investing.com — Gold prices were little changed in Asian trade on Friday after falling below key levels this week on a sharp rebound in the dollar, with the U.S. main market now looking for further clues about a 2024 interest rate cut. The focus is on labor market data.
The yellow metal had some losses this week following a sharp sell-off towards the end of 2023, but profit-taking and increased uncertainty over the Federal Reserve's plans to cut interest rates this year. Couldn't sustain the rise.
The Fed's December meeting provided few clues about when it would start cutting rates, leading the market to slightly back down on expectations that it would start cutting rates as early as March 2024.
The trend has spurred a sharp rally in the dollar, which is on track to gain more than 1% for the week and hit its highest level since July 2023.
It rose 0.1% to $2,045.41 an ounce by 11:25 p.m. ET (3:25 p.m. GMT) and rose 0.1% to $2,052.05 an ounce. Both products fell 0.8%-1% this week.
As the market reduces expectations for an early interest rate cut, we look forward to an increase in the number of non-agricultural sector employees.
The market is now focused squarely on the December numbers, which will be released later on Friday. It is clear that traders remain wary of unexpected strength after better-than-expected weekly unemployment claims and private payrolls data released earlier this week. is expected to indicate further cooling in the labor market.
A cooling labor market and slowing inflation are two key factors the Fed is considering in lowering interest rates. Relations between the two sides have cooled significantly in recent months, but traders remain uncertain whether that will be enough to prompt aggressive monetary easing from the Fed.
The results showed traders scaled back their bets on a 25 basis point rate cut in March 2024, with the probability narrowing to 62% from a 72% chance seen a week ago.
This idea caused a sharp rise in the dollar and spurred a fall in gold.
Still, the yellow metal remains in heavy melting mode until late 2023, and has now remained above $2,000 an ounce for more than a month. Interest rate easing is expected to benefit bullion prices this year, given that high interest rates drive up the opportunity cost of purchasing gold.
Copper prices fall for the week on strong dollar and weak PMI
Among industrial metals, copper prices are expected to fall on a weekly basis amid some profit-taking on the rise at the end of 2023.
The currency due at the end of March fell 0.1% to $3.8487 per pound, and has fallen about 1.1% this week.
Red metal prices were hit by a series of weak Purchasing Managers indicators around the world, indicating continued declines in manufacturing activity in several major economies, including the United States.
Weak PMI readings in China also weighed heavily on copper, as official data showed China's manufacturing sector contracted further in December.
China is the world's largest importer of copper, and the country's slow economic recovery has raised concerns about a slowdown in copper demand.
