Gold prices moved little on Tuesday as markets awaited more cues on U.S. monetary policy this week, while copper prices fell slightly after China cut its lending benchmark for the first time in 10 months.

China trimmed its benchmark loan prime rate (LPR) by 10 basis points across the board – a move that was largely expected by markets – as Beijing struggles to shore up a slowing economic rebound in the country.

But the move sent a somewhat negative signal to metal markets, given that it highlights deepening cracks in the Chinese economy despite the lifting of anti-COVID measures earlier this year.

Copper dips as China rate cut comes amid economic weakness

Copper prices retreated further from a recent one-month high, as the LPR cut appeared to be largely priced in by markets.

The move was preceded by cuts in China’s short and medium-term rates, and was widely anticipated by markets.

Copper futures fell 0.2% to $3.8565 a pound by 21:37 ET (01:37 GMT).

China’s rate cuts come as the government struggles to support slowing economic growth, after a string of weak economic readings showed that a post-COVID recovery had run out of steam. Several major investment banks, most recently Goldman Sachs (NYSE:GS), also cut their outlook for China’s economy this year.

The country is the world’s largest copper importer, with any cues on its economy being largely factored into commodity prices.

Fed, economic uncertainty keeps gold in holding pattern

Federal Reserve Chair Jerome Powell is expected to testify before Congress on Wednesday, potentially serving up more cues on U.S. monetary policy after the central bank paused its rate hike cycle last week.

But gold came under pressure as the Fed also flagged a higher peak interest rate this year, which could herald more hikes from the bank as it moves against sticky inflation.

Spot gold fell 0.1% to $1,948.72 an ounce, while gold futures fell 0.1% to $1,960.15 an ounce.

Uncertainty over rising interest rates, coupled with mixed signals on a potential recession this year kept gold trading within a tight trading range for the past month.

Prices have moved largely between $1,925 and $2,000 an ounce, with few catalysts allowing for a breakout in either direction.

While the prospect of rising interest rates has kept gains in gold limited, the yellow metal remained supported by some safe haven demand as investors positioned for a potential recession this year.

Other precious metals followed a similar trend as gold, with platinum and silver futures both treading water on Tuesday.

Focus this week is also on a slew of Fed speakers for more cues on monetary policy, as well as U.S. business activity data for June.