Gold prices under pressure with Powell speech in focus

Gold prices moved little in Asian trade on Wednesday, but were nursing steep losses over the past two sessions as hawkish comments from Federal Reserve officials saw traders reconsider expectations for more interest rate hikes.

This put an upcoming speech by Fed Chair Jerome Powell squarely in focus, after his comments at a meeting last week were seen as somewhat less hawkish by markets.

Gold saw some gains in the past week after the Fed meeting and a softer-than-expected nonfarm payrolls reading pushed up hopes for an end to the central bank’s rate hike cycle.

But several Fed officials downplayed expectations for a pause, citing the need for more hikes amid strength in the economy and sticky inflation.

This dented the outlook for gold, given that higher rates diminish the opportunity cost of investing in the yellow metal.

Spot gold fell 0.1% to $1,967.78 an ounce, while gold futures expiring in December were flat at $1,973.85 an ounce by 23:33 ET (04:33 GMT).

Powell speech in focus as Fed officials downplay pause bets
Powell is set to speak twice this week, once on Wednesday and once on Thursday. Any more comments on the U.S. economy and monetary policy will be squarely in focus, especially following a softer-than-expected nonfarm payrolls reading for October.

But before Powell, several Fed officials, including Governor Michelle Bowman, Minneapolis Fed President Neel Kashkari and Chicago Fed President Austan Goolsbee noted that inflation still remained too high, and that rates could potentially rise further in the coming months.

Even if the Fed pauses, it is only expected to begin trimming rates by mid-2024, limiting any major near-term gains in gold.

The central bank signaled that U.S. rates will remain higher for longer- likely remaining above 5% until end-2024. This scenario bodes poorly for the yellow metal in the near-term.

Gold also saw receding safe haven demand amid easing market concerns over the Israel-Hamas conflict.

Copper creeps lower amid China concerns
Among industrial metals, copper prices fell slightly on Wednesday, extending recent losses after weak Chinese economic data raised more concerns over the world’s largest copper importer.

Copper futures expiring in December fell 0.1% to $3.6822 a pound.

After Chinese trade data largely disappointed markets on Tuesday, focus is now on inflation readings from the country, due Thursday, for any signs of a pick-up in spending.

Copper investors took some relief from reports that Chinese regulators had met with several major property developers in the country to gauge their financial conditions, potentially heralding more policy support for the sector.