Gold prices experienced a further decline in Asian trade on Tuesday as the dollar rebounded and Treasury yields strengthened. This drop came as traders awaited a series of important Federal Reserve speakers scheduled for the week.
One of the primary factors contributing to the decline in gold prices was the rebound of the dollar from six-week lows following a warning by Minneapolis Fed President Neel Kashkari. Kashkari stated that it was premature to assume an end to the Fed’s rate hike cycle. Consequently, traders scaled back their bets on a sustained Fed pause, leading to losses in non-yielding assets, including gold.
By 00:15 ET (05:15 GMT), spot gold fell 0.3% to $1,971.43 an ounce, while gold futures expiring in December dropped 0.5% to $1,977.95 an ounce. Gold had been experiencing extended declines recently, with traders also factoring in a smaller risk premium due to the Israel-Hamas conflict that showed no significant signs of escalation.
Market focus now turns to the forthcoming speeches by key Federal Reserve officials, particularly Chair Jerome Powell. Powell is expected to speak at two separate events on Wednesday and Friday. Traders are eager to see whether Powell maintains his hawkish stance or adjusts it given the cooling labor market.
While Powell’s comments at a recent meeting suggested a potential pause in the Fed’s actions, gold received limited support as traders shifted their attention towards risk-driven assets. Additionally, the outlook for gold remains subdued due to expectations of higher U.S. interest rates in the foreseeable future.
Apart from Powell, other notable speakers from the Federal Reserve, including Austan Goolsbee, Christopher Waller, and Lorie Logan, are scheduled to address the market this week.
In other news, copper prices faced a sharp decline following the release of disappointing trade data from China. The country’s exports in October fell more than expected, with the trade surplus narrowing to its lowest level in 17 months. This led to concerns over a potential slowdown in China’s major economic drivers.
Although Chinese copper imports reached a 10-month high in October, the weakness in exports indicated a cooling demand. Stimulus measures implemented by the Chinese government provided a temporary boost, but year-to-date copper imports remained down nearly 7%, highlighting the country’s diminishing demand as the world’s largest copper importer.