© Reuters Investing.com – Gold prices fell below key levels in Asian trading on Tuesday, as traders turned to the dollar ahead of US inflation data due later today, which is expected to determine the course of interest rates.
The yellow metal has been exposed to significant profit-taking over the past two weeks, pushing prices to their lowest levels in more than three weeks, while the possibility of higher and longer US interest rates weakened gold’s expectations.
Futures fell 0.1% to $1,944.71 an ounce, while December maturities fell 0.1% to $1,948.25 an ounce at 12:32 a.m. EST (0532 GMT).
US CPI in focus, dollar and yields rise
Gold prices came under pressure from the strength of the US dollar, with markets mostly holding interest rate sensitive assets ahead of key gold data due later in the day.
The reading is expected to show some slowdown in inflation in October, after inflation rose above expectations over the past two months. The reading also comes shortly after a series of Federal Reserve officials warned that persistent inflation could give the bank greater impetus to raise interest rates further.
High interest rates over a long period of time are expected to put pressure on gold, as they increase the opportunity cost of investing in bullion. This trade has weighed on gold over the past year and certainly made its outlook uncertain.
However, expectations of a global economic slowdown kept some bidders alive for the yellow metal. Data expected later today could show that the euro zone is in the third quarter.
The ongoing war between Israel and Hamas is also expected to increase safe-haven demand for gold, although traders have begun pricing in a much lower risk premium for the yellow metal in the past two weeks.
Copper is under pressure from weak Chinese data
Among industrial metals, copper prices fell on Tuesday amid continuing pressures from weak Chinese economic data.
The December interest rate fell by 0.3% to $3.6603 per pound.
China, the world’s largest copper importer, saw a sharp decline in profits in October, data showed on Monday. The reading indicated that liquidity levels in the country are declining despite the recent stimulus measures taken by the government.
More economic data is expected from the country this week: on the agenda on Wednesday, .
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