On Monday, gold prices declined marginally below important levels as caution set in ahead of crucial U.S. inflation data and a Federal Reserve meeting this week. Copper prices also suffered from uncertainties related to the rise in COVID-19 cases in China. The statistics released last week showed that U.S. producer price inflation continued to decline in November, but at a slower rate than anticipated. This news had a modestly favorable impact on gold prices. The consumer price index, which is due on Tuesday, may follow a similar trajectory as indicated by the reading.
This year, the Fed raised interest rates significantly in response to rising U.S. inflation, which had a negative impact. On Wednesday, the central bank is also scheduled to wrap up a two-day meeting when it is anticipated to hike rates by a very modest 50 basis points. But the trajectory of U.S. inflation will primarily determine the size of future rate hikes. Gold futures declined 0.3% to $1,804.95 per ounce, while spot gold slipped 0.2% to $1,793.72 per ounce. Due to traders’ caution ahead of important data releases this week, the price of the yellow metal closed last week relatively flat.
On Monday, silver and platinum futures also experienced declines. Platinum futures were down 1.7%, while silver futures dropped 0.9%. on the metal markets by increasing the opportunity cost of holding non-yielding assets. The markets are alert for any indications that U.S. inflation remained stickier than expected in November since this could indicate that the Fed will continue raising interest rates. If inflation continues to be obstinate, the central bank has issued a warning that U.S. interest rates could peak at higher levels than anticipated.
The higher-than-expected PPI inflation figures as well as the impending release of U.S. economic indices gave the dollar some support on Monday. After two consecutive weeks of advances, copper prices among industrial metals dipped on Monday because of mounting skepticism about COVID in China. A pound of copper futures decreased 0.4% to $3.8412. The greatest copper importer in the world is now unsure whether the economy will recover as a result of this. The outlook for copper, which typically benefits from an environment of rapid growth, has also been dimmed by weakening economic data from numerous significant markets.