Gold Slips From Its High as Risk Appetite Changes While Copper Rises on Investor Optimism

 

Gold retreated from its two-week high in the Asian trading session on Thursday (Dec. 12) as investors assessed how US inflation data could influence the Fed rate decision.

 

 

Gold rose sharply yesterday (Dec. 11) as traders increased bets on a next-week Fed rate cut after Consumer Price Index inflation data met expectations. CME Fedwatch showed that markets had a 98% chance of a 25 basis point cut.

 

However, improved risk appetite and yesterday's surge in Wall Street indices depressed gold's performance today. The dollar's resilience also limited gold's gains. Wednesday's CPI data showed the highest inflation in seven months, potentially making the Fed remain cautious about further monetary easing. Traders preferred the dollar as doubts about the long-term prospect of inflation and interest rates grew.

 

The spotlight is on Producer Price Index data released later today, another inflation gauge for the rate adjustment. People are monitoring the central bank's interest rate outlook with growing expectations that it will slow down the easing speed in 2025.

 

In contrast to gold, copper rose, driven by increased optimism that China, the biggest copper importer, would introduce more stimulus measures.

 

Now, Benchmark copper futures on the London Metal Exchange jumps 0.84%. February copper futures rises 1.41%. They hit a one-month high yesterday.

 

China's Politburo said on Dec. 9 that China would adopt the gentle touch in easing monetary policy to support economic growth.

 

China's Central Economic Work Conference, a high-level government meeting, will conclude later today, giving the economic agenda for 2025 and hints about the stimulus design.