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Gold prices find support above $2,000, but still rangebound on rate woes By Investing.com – Investing.com


©Reuters

Investing.com — Gold prices rose in Asian trading on Monday, extending a rebound from one-month lows after recently breaking below a key support level, but prices dipped on worries about longer-term US interest rates. It stayed mostly within range.

The yellow metal briefly fell below $2,000 an ounce in early February as better-than-expected U.S. inflation data led traders to largely price in the possibility of an early interest rate cut by the Federal Reserve.

Gold has rallied above support levels in the past two sessions, but remains largely within the $2,000 to $2,050 an ounce trading range established since mid-January. The yellow metal has struggled to make headway in the face of weak US inflation and a hawkish outlook for interest rates.

By 12:37 ET (05:37 GMT), the price rose 0.3% to $2,019.95 an ounce, while the price for April expiry rose 0.4% to $2,031.15 an ounce.

Gold’s strength weighed on the dollar as it eyes a three-month high after Friday’s better-than-expected inflation data.

The reading came just days after January’s inflation rate came out stronger than expected. A number of Fed officials have issued similar warnings in recent weeks, and the persistence of inflation has diminished the Fed’s incentive to immediately begin easing monetary policy.

The focus now is on further clues regarding interest rates. During the meeting, the Fed largely downplayed any bets on early interest rate cuts.

A long-term rise in interest rates bodes badly for gold, given that it increases the opportunity cost of investing in the yellow metal.

This idea also influenced other precious metals. It was down 0.3% and down 1.3%.

Copper price decline, focus on China trends

Among industrial metals, copper prices fell on Monday but continued to rise sharply from the previous week on hopes of improving economic conditions in China.

The pound, which expires in March, fell 0.4% to $3.8083, after rising more than 4% the previous week.

Data showing an increase in consumer spending during China’s Lunar New Year holiday raised hopes for a broader economic recovery in the world’s biggest copper importer.

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