Selloff or Market Correction? Either Way, Here's What to Do NextSee Overvalued Stocks

Gold prices muted before inflation data, copper sinks on Zambia discovery

Published 2024-02-12, 12:38 a/m
MSFT
-
GC
-
HG
-

Investing.com-- Gold prices moved little in holiday-thinned Asian trade on Monday, with the yellow metal keeping to a trading range established over the past week as traders sought more cues from upcoming U.S. inflation data.

Among industrial metals, copper prices hit a near three-month low after KoBold Metals- a startup backed by Microsoft (NASDAQ:MSFT) founder Bill Gates, found a large copper deposit in Zambia that could form a major copper mine.

Waning expectations of early interest rate cuts by the Federal Reserve saw gold fall back into a $2,000 to $2,050 trading range in February, as markets began steadily pricing out chances of a rate cut in March and May. 

A dearth of direct cues over the past week also gave gold few cues, with traders now looking to the upcoming consumer price index (CPI) data as the next big signal. 

Spot gold fell 0.1% to $2,023.48 an ounce, while gold futures expiring in April fell 0.1% to $2,037.20 an ounce by 00:07 ET (05:07 GMT). Trading volumes in the two were muted on account of market holidays in China, Hong Kong, South Korea and Japan. 

CPI data, Fed signals in focus 

Gold is expected to see little action ahead of U.S. CPI data on Tuesday. While the reading is expected to show that inflation eased further in January, price pressures are still expected to remain well above the Fed’s 2% annual target, giving the central bank more impetus to keep interest rates higher for longer. 

Along with the inflation data, a sting of Fed officials, including Neel Kashkari, Mary Daly and Ralph Bostic are on tap this week.

Fed officials are expected to reiterate recent comments that the central bank is in no hurry to begin trimming interest rates. This notion had sparked steep losses in gold earlier in February, given that higher rates push up the opportunity cost of investing in the yellow metal.

The dollar also remained in sight of a recent three-month high, keeping gold prices under pressure.

Still, gold managed to hold above the $2,000 an ounce support, although analysts cautioned that the level may be tested in the coming days. 

Copper sinks on discovery of large deposit in Zambia 

Copper prices fell on Monday, extending losses from the prior session on fears of a potential increase in global supplies.

Copper futures expiring in March fell 0.4% to $3.6727 a pound- their weakest level since mid-November. 

KoBold Metals, a start-up backed by Microsoft founder Bill Gates, said it had discovered a huge copper deposit in Zambia, which could potentially form one of the largest mines in the world.

Zambian President Hakainde Hichilema said that the deposit- found in the Mingomba Project- could produce between 500 to 600,000 metric tons of copper when operational. In comparison, Chile's Escondida Mine- which is considered the world's largest copper mine by production, produced about 1 million tons of copper in 2022.

The discovery points to a potential increase in copper supplies over the coming years- heralding more pressure on prices of the red metal, which usually benefit from tighter market conditions.

Copper was already nursing steep losses so far in 2024 amid persistent concerns over slowing demand in top importer China.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.