Gold prices steady but nurse steep losses as dollar bounces on Trump trade

Investing.com– Gold prices moved little in Asian trade on Tuesday after tumbling from record highs in recent weeks as the dollar firmed sharply amid speculation over a second Donald Trump presidency.

Improved risk appetite, following Trump’s election victory last week, sapped gold of safe haven demand. A sharp rally in the dollar also pressured bullion prices.

Spot gold fell 0.1% to $2,617.64 an ounce, while gold futures expiring in December rose 0.2% to $2,623.70 an ounce by 23:27 ET (04:27 GMT). 

Gold battered by Trump trade; CPI, Fedspeak awaited 

Spot prices tumbled from record highs of nearly $2,800 an ounce over the past two weeks, dented by a spike in the dollar as markets bet that inflationary policies under Trump will keep interest rates high in the long term.

The dollar raced to four-month highs this week, while Treasury yields also drifted higher. 

Trump’s protectionist stance towards trade and immigration is expected to factor into higher inflation. 

Focus this week is on key U.S. consumer price index inflation data, which is expected to show inflation remained sticky in October. The reading is also likely to factor into expectations for interest rates.

Beyond the inflation reading, a slew of Federal Reserve officials are also set to speak this week, offering up more cues on policy after the central bank cut rates by 25 basis points last week.

Traders were seen pricing in a 66.7% chance for another 25 bps cut in December, and a 33.3% chance rates will remain unchanged, CME Fedwatch showed.

Other precious metals were mixed on Tuesday, but were also nursing recent losses from the Trump trade. Platinum futures fell 0.9% to $962.95 an ounce, while silver futures rose 0.1% to $30.645 an ounce.

Copper sinks, China stimulus underwhelms

Among industrial metals, copper prices retreated on Tuesday, extending recent losses after more fiscal measures in top importer China largely underwhelmed markets.

Benchmark copper futures on the London Metal Exchange fell 0.2% to $9,290.0 a ton, while December copper futures fell 0.6% to $4.220 a pound.

China’s National People’s Congress approved 10 trillion yuan ($1.4 trillion) in new debt measures to support local governments. But traders balked at a lack of targeted measures for personal consumption and the property markets, especially in the face of increased trade tariffs under a Trump presidency. 

Still, analysts at JPMorgan said China was likely to unveil more targeted fiscal measures in the coming months, and that Beijing was likely trying to gauge the ramifications of a Trump presidency.