Gold and Copper Prices Decline Amid Strong Dollar and China Concerns

Gold prices experienced a slight decline during Asian trading on Tuesday, continuing a downward trend fueled by a robust U.S. dollar and expectations of smaller interest rate cuts.

Gold Prices Under Pressure

Spot gold fell 0.1% to $2,645.74 per ounce, while December gold futures dropped 0.1% to $2,662.10 per ounce as of 23:52 ET (03:52 GMT). The metal's inability to reach September's peaks highlights the ongoing pressure from the dollar, which surged to a two-month high on Monday. Hawkish remarks from Federal Reserve officials, particularly Governor Christopher Waller, have further strengthened the dollar by emphasizing a cautious approach to interest rate reductions. Current trading suggests an over 80% probability of a 25 basis point cut in November, compared to the larger 50 basis point cut in September.

Higher interest rates typically diminish gold's appeal, as they increase the opportunity cost of holding non-yielding assets like bullion. This dynamic has contributed to gold's recent struggles.

Industrial Metals Retreat

Meanwhile, industrial metals also faced challenges, with copper prices retreating due to ongoing concerns regarding China, the top importer. Benchmark copper futures on the London Metal Exchange fell 0.2% to $9,633.50 per ton, as investors reacted to mixed signals about China's stimulus plans. Although the Ministry of Finance announced an increase in fiscal spending, the lack of specific details led to disappointment among investors.

Despite positive trade data indicating a rise in Chinese copper imports, the overall trade balance fell more than expected, further intensifying worries about China's economic stability.

In summary, gold and copper prices are under significant pressure due to strong dollar and economic concerns in China, which could have lasting implications for investors in the metals market.