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Gold Prices Hold Steady Ahead of US CPI Data; Oil Sees Slight Uptick

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Gold prices (XAUUSD:CUR) remained stable at the beginning of the week on Monday, hovering close to a three-week low before the release of U.S. inflation data. The focus lies on the cues it could offer regarding the Federal Reserve’s rate-hike trajectory, following the recent hawkish comments from Chairman Jerome Powell. Spot gold registered a 0.10% increase, reaching $1,938.77 an ounce by 0555 am ET.

Last week, gold saw a 2.8% decline as investors tempered their expectations of interest rate cuts, prompted by the Fed chair’s emphasis on the central bank’s target of 2% inflation and its readiness to raise interest rates if needed.

Financial analysts on Wall Street anticipate the consumer price index to reflect a slower growth rate, projecting an increase of 3.3% annually in October, down from 3.7% in September, according to a Bloomberg survey of economists. Gold stands particularly susceptible to upticks in U.S. interest rates and higher yields, which elevate the opportunity cost of holding non-yielding bullion.

Gold prices experienced a brief surge to $2,000/oz following an attack by Hamas on Israel, before subsequently retracing. ANZ analysts note that β€œWith geopolitical tensions now becoming a recurring feature, we believe the price of gold embeds a structural risk premium.”

β€œDespite silver yet to garner significant investor attention, we are of the opinion that silver’s robust fundamentals will lead to a reversal of Exchange Traded Fund (ETF) outflows in the coming year. On the other hand, platinum is swiftly approaching price parity with palladium, driven by a sharp sell-off in palladium and its price decline. We anticipate both metals to stabilize at their current levels,” stated analysts.

Oil prices observed a marginal increase, although overall investor sentiment remains cautious over the demand outlook and the hawkish remarks on the interest rate trajectory.

Concerns grew over weakening demand following last week’s bleak economic indicators from China, leading refiners to request reduced supply from Saudi Arabia, the world’s largest exporter, for December.

Despite a 2% gain on Friday due to Iraq’s support for oil cuts by OPEC+, prices recorded a 4% loss for the week, marking a three-week losing streak for the first time since May.

In the realm of base metals, copper prices reversed course to trade higher as the dollar index (DXY) softened, while traders awaited Tuesday’s U.S. inflation data for insights into prospective interest rate hikes.

In the agriculture market, soybeans and cocoa prices witnessed an increase, while wheat futures experienced a decline.

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